Blog Coverage Samsung Bets Big on Connected Car Technologies with Acquisition of Harman International

Upcoming AWS Coverage on Fabrinet Post-Earnings Results

LONDON, UK / ACCESSWIRE / November 15, 2016 / Active Wall St. blog coverage looks at the headline from Harman International Industries Inc. (NYSE: HAR). Korean Electronics giant, Samsung Electronics announced the acquisition of Harman International Industries on November 14, 2016. The all-cash deal valued at $8 billion is the biggest overseas investment ever made by a Korean company. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

One of Harman International Industries’ competitors within the Electronic Equipment space, Fabrinet (NYSE: FN), reported on November 07, 2016, its first quarter fiscal year 2017 financial results. AWS will be initiating a research report on Fabrinet in the coming days.

Today, AWS is promoting its blog coverage on HAR; touching on FN. Get all of our free blog coverage and more by clicking on the links below:

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Commenting on the deal, Oh-Hyun Kwon, Vice Chairman and Chief Executive Officer of Samsung Electronics said:

“HARMAN perfectly complements Samsung in terms of technologies, products, and solutions, and joining forces is a natural extension of the automotive strategy we have been pursuing for some time.”

Dinesh Paliwal, Chairman, President and CEO of Harman added:

“Partnerships and scale are essential to winning over the long term in automotive as demand for robust connected car and autonomous driving solutions increases at a rapid pace. This transaction will bring HARMAN and Samsung’s complementary strengths together to accelerate innovation in this space.”

Terms of the merger

Under the agreed terms, Samsung will pay $112.00 per share in cash for each Harman’s share, aggregating the value of the transaction to $8 billion. The offer price is at a premium of 28% of Harman’s closing stock price on November 11, 2016, the last day of trading before the deal was announced. The deal has been approved by the Board of Directors of both companies and is expected to close in mid-2017, subject to regulatory approvals. Samsung plans to use its cash reserves to finance the acquisition.

Once the merger is finalized, Harman will become a standalone subsidiary of Samsung and continue its operations from its current location. Samsung will continue to use Harman’s consumer and professional audio brands. Samsung plans to retain all of Harman’s employees, including the top management team lead by current CEO Dinesh Paliwal. Samsung had established an Automotive Electronics Business Team in December 2015 to identify prospects in the auto sector. This team will join forces with Harman’s team to take advantage of the growth opportunities in the technologies for the automotive sector. Samsung had invested $450 million in Chinese electric auto and rechargeable batteries company BYD in July 2016 to strengthen its Auto business. However, Samsung has clarified that it will not enter the business of manufacturing cars.

What Samsung gains from this deal?

Samsung, which is mainly known for its smart phones and household electronics product, is looking at new areas of revenues and growth. The deal will give Samsung immediate presence in the connected technologies, especially in the connected car solutions space where Harman is a market leader. Automotive electronics has been one of the priority areas for Samsung, as its analysis suggests that this market has huge potential and can grow to $100 billion by 2025. It will also mark Samsung’s entry into the driverless technology space. Harman connected car solutions and its products are used in more than 30 million vehicles. Harman’s total sales for the 12-month period ending in September 2016 were $7 billion and nearly 65% of this sale is attributed to its automotive electronics solutions. Harman has an order backlog of $24 billion as on June 30, 2016, which is more than three times its annual sales.

Harman offers other connected car services, such as safety capabilities and a cybersecurity platform to secure hardware, provide operating system access control and protect networks. The company is also known for manufacturing lifestyle car audio systems, under brands such as JBL. Samsung which is already manufacturing connected devices for the connected world like phones, tablets, screens etc., will be able to harness Harman’s technology and products to come out with better integrated and wider range of products.

Harman has a team of approximately 8000 engineers and software professionals working on various IoT (Internet of Things) projects. Samsung will be able to take advantage of these professionals and push its efforts in the IoT, into high gear.

Stock Performance

On Monday, the stock closed the trading session at $109.72, which is very close to Samsung’s offer price of $112. The stock surged 25.18% from its previous closing price of $87.65 at the end of yesterday’s trading session. A total volume of 13.19 million shares have exchanged hands, which was higher than the 3-month average volume of 696.42 thousand shares. Harman International Industries’ stock price rallied 37.30% in the last month, 29.44% in the past three months, and 50.21% in the previous six months. The stock is trading at a PE ratio of 21.01 and has a dividend yield of 1.28%.

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