Samsung Electronics and Harman International Industries, Incorporated today announced that they have entered into a definitive agreement under which Samsung will acquire Harman for $112 per share in cash, or total equity value of approximately $8 billion.
Samsung says the transaction will immediately give it a significant presence in the large and rapidly growing market for connected technologies, particularly automotive electronics, which has become a strategic priority for the company.
Upon closing, Harman will operate as a standalone Samsung subsidiary, and continue to be led by Dinesh Paliwal and Harman’s current management team. Samsung plans to retain Harman’s workforce, headquarters and facilities, as well as all of its consumer and professional audio brands, which include AKG, BSS, Crown, dbx, JBL Professional, Soundcraft and Studer. Samsung believes the combination will increase career development and advancement opportunities for the employees of both companies.
The Korean tech giant predicts that the coming together of the two firms will deliver significant growth opportunities and benefits to customers by leveraging Samsung’s and Harman’s complementary technologies, resulting in increased market penetration across important end markets. It is also aiming for an expansion of the combined company’s business-to-business platform through its ability to deliver integrated, large-scale audio and visual professional solutions at stadiums, concert facilities and other performance centres.
The purchase price represents a premium of 28% based on Harman’s closing stock price on 11 November 2016 and a 37% premium to Harman’s 30-calendar day volume weighted average price also ending 11 November. Samsung expects to use cash on hand to fund the transaction, and the agreement has been unanimously approved by the boards of directors of both companies.
The acquisition, which is subject to approval by Harman shareholders, regulatory approvals and other customary closing conditions, is expected to be completed in mid-2017.