SEOUL (Reuters) - Samsung Electronics has agreed to buy Harman International Industries in an $8 billion deal, marking a major push into the auto electronics market and the biggest overseas acquisition ever by a South Korean company.

The logo of Samsung Electronics is seen at its headquarters in Seoul, South Korea, July 4, 2016. REUTERS/Kim Hong-Ji/File Photo

The transaction highlights Samsung’s efforts to break into the high-barrier automotive industry where it has little track record and also marks a strategic shift for the electronics company, which has previously shunned big acquisitions.

“An M&A; deal this big is a first for us. But it shows that under Jay Y. Lee, the company is changing and open to new ways to grow,” a source familiar with the deal told Reuters, referring to Samsung Electronics’ vice chairman.

The purchase of the Stamford, Connecticut-based maker of connected car and audio systems is part of Samsung’s search for new growth areas as its smartphone business - scarred by the withdrawal of the fire-prone Galaxy Note 7 - slows.

The greater use of electronics and software in vehicles, and the ability of cars to connect to smartphones and other devices, is offering technology companies with new business opportunities.

“We have been studying the automotive market for some time. We conclude that organic growth will not get us where we want to go fast enough,” Young Sohn, President and Chief Strategy Officer of Samsung Electronics, said on a conference call.

“Samsung will not get into the business of manufacturing cars,” he said.

Samsung, a maker of chips, displays, smartphones and TVs, agreed to acquire Harman for $112.00 per share in cash, a 28 percent premium to the U.S. company’s closing price on Friday.

Harman shares rose 25.6 percent to their highest level in more than one year.

“Harman was missing, in our opinion, a meaningful presence in displays and cockpit electronics; Samsung has these,” Baird Equity Research said in a report.

But investors in Samsung had reservations about the purchase price.

“Samsung is using its huge cash pile to pull ahead of rivals in the auto technology market. But it remains to be seen whether Samsung will be able to grow into a company that will be able to compete with the likes of Bosch and Continental,” said fund manager Park Jung-hoon of HDC Asset Management, which owns Samsung Electronics shares.

Harman’s products, which provide infotainment, telematics, connected safety and security services, are used in more than 30 million vehicles made by automakers such as BMW, Toyota Motor Corp and Volkswagen (VOWG_p.DE), according to its website.

Harman earns around two-thirds of its revenue from its automotive-related business, and its automotive order backlog as of end-June stood at $24 billion, more than three times annual sales of $6.9 billion in fiscal 2016.

Samsung created an automotive electronics business team a year ago to look for opportunities in this area. This year it invested $450 million in Chinese automaker and rechargeable batteries firm BYD Co Ltd.

Separately, Samsung has held talks with Fiat Chrysler Automobiles (FCA) over a potential sale or partnership for the latter’s Magneti Marelli auto parts maker, sources have said.</s>Samsung Electronics ( ) said on Monday it had agreed to buy Harman International Industries ( ) for about $8 billion, a deal that enables the South Korean electronics giant to expand its presence in the automotive electronics market.

Samsung said in a statement it expected to use cash to fund the deal, which represents a premium of 28 percent to Harman's Friday closing price.</s>Samsung Electronics has announced a $8-billion deal to buy Harman International Industries, marking a major push into auto-related technology and the biggest overseas acquisition ever by a South Korean firm. Ryan Brooks reports.</s>Samsung Electronics announced a $8-billion deal on Monday to buy Harman International Industries, marking a major push into auto-related technology and the biggest overseas acquisition ever by a South Korean firm.

The purchase of the Stamford, Connecticut-based maker of connected car and audio systems is part of Samsung’s efforts to find new areas of growth as its mainstay smartphone business – scarred by the disastrous withdrawal of the fire-prone Galaxy Note 7 – slows.

“Samsung is using its huge cash pile to pull ahead of rivals in the auto technology market. But it remains to be seen whether it will be able to grow into a company that will be able to compete with the likes of Bosch and Continental,” said HDC Asset Management fund manager Park Jung-hoon.

Samsung agreed to acquire Harman for $112.00 per share in cash, a 28 per cent premium to the U.S. firm’s closing price on Friday.

Harman’s products, which provide infotainment, telematics, connected safety and security services, are used in more than 30 million vehicles made by auto makers such as BMW, Toyota Motor Corp and Volkswagen, according to its website.

Samsung said that Harman, which has around 30,000 employees, will operate as a standalone Samsung subsidiary and will continue to be led by its chief executive, Dinesh Paliwal.

“Upon closing, the transaction will immediately give Samsung a significant presence in the large and rapidly growing market for connected technologies, particularly automotive electronics, which has been a strategic priority for Samsung,” it said in a statement.

Samsung created an automotive electronics business team a year ago to identify growth opportunities in the sector. This year it invested $450-million in Chinese auto maker and rechargeable batteries firm BYD Co Ltd.

Separately Samsung has held talks with Fiat Chrysler Automobiles (FCA) over a potential sale or partnership for its Magneti Marelli auto parts maker, sources have said. The current status of those talks is unclear.

The Harman acquisition is subject to regulatory approvals and is expected to close in mid-2017.</s>MOTORING NEWS - Samsung Electronics said on Monday it would buy US auto parts maker Harman International Industries for $8 billion in a bid to enter the growing market for automotive technology to produce "connected" cars.

The deal, the biggest in the firm's history, will provide a chance for the tech titan to move past the exploding Galaxy Note 7 crisis that is expected to cost it billions of dollars as well as it cherished reputation.



Board members of Samsung – the world's largest producer of smartphones – approved the all-cash deal of the Connecticut-based firm for $112 a share, Samsung said in a statement. The deal will give the South Korean giant a "significant presence" in the global market for online-connected auto parts, the firm 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," Samsung vice chairman Kwon Oh-Hyun said in a statement.



"Harman immediately establishes a strong foundation for Samsung to grow our automotive platform."



Harman produces high-end audio systems and other internet-enabled entertainment features for global carmakers including General Motors and Fiat Chrysler.



Samsung Electronics – the flagship unit of the Samsung Group – produces a wide range of electronics from smartphones to home appliances and semiconductors.



The latest deal will offer the firm a chance to combine Harman's expertise in high-tech auto parts and its own mobile and semiconductor technologies, Samsung said. Samsung is hoping to complete the deal by the third quarter of 2017 after getting approvals from Harman shareholders and regulators.</s>Samsung Electronics is acquiring Stamford-based car and audio systems supplier Harman International Industries for $112 per share in cash, or total equity value of about $8 billion – reportedly the largest acquisition in Samsung’s history.

The South Korean company said it expects the automotive electronics sector to grow to more than $100 billion by 2025, noting that approximately 65 percent of Harman’s $7 billion of reported sales during the 12 months ended Sept. 30 were automotive-related, and that its order backlog for the market was approximately $24 billion as of June 30.

“This compelling all-cash transaction will deliver significant and immediate value to our shareholders and provide new opportunities for our employees as part of a larger, more diversified company,” said Dinesh Paliwal, Harman chairman, president and CEO. “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.”

According to a press release, Samsung is seeking a “long-term growth strategy in automotive electronics, and plans to retain Harman’s workforce, headquarters and facilities, as well as all of its consumer and professional audio brands.”

The deal, which is subject to approval by Harman shareholders and regulators, is expected to be completed in mid-2017, after which Harman will be a standalone Samsung subsidiary. It is expected to remain in Stamford.

Harman’s brands include AKG, Harman Kardon, Infinity, JBL, Bang & Olufsen, Bowers & Wilkins, Lexicon, Mark Levinson and Revel. More than 30 million automobiles on the road today are equipped with Harman audio and connected car systems.</s>Samsung Electronics, the world’s biggest maker of smartphones, agreed to buy Harman International Industries for about $8 billion in cash to expand in high-end car audio and connected automobiles.

Samsung said in a statement Monday. The offer is 28 per cent above Harman’s closing price of $87.65 in New York on Friday.

Samsung announced the acquisition just weeks after talks to buy sections of Fiat Chrysler Automobiles NV’s parts unit were said to broken down. Harman gets about 65 per cent of its sales from the automotive sector,

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,” Vice Chairman Kwon Oh-hyun said in the statement. “Harman immediately establishes a strong foundation for</s>Samsung is spending $8 billion to try to gain an edge on other big tech companies that are piling into autos.

The South Korean electronics giant said on Monday it was buying Harman International Industries (HAR), a U.S. firm that makes infotainment, safety and security systems for cars.

Tech giants have been plowing money into the auto industry: Apple is working on a secretive car-related project and Google (GOOGL, Tech30) is developing self-driving vehicles. Last month, chip maker Qualcomm (QCOM, Tech30) splashed out $39 billion on NXP Semiconductors (NXPI), the leading player in automotive computer chips. It was the second biggest tech deal ever.

Samsung (SSNLF) says it expects the automotive electronics market to be worth more than $100 billion by 2025.

Late last year, the company set up its own auto components business to work on self-driving cars and infotainment. But buying Harman makes it a major player: more than 30 million vehicles already use the U.S. company's technology.

Samsung is offering $112 in cash for each Harman share, 28% higher than the stock's Friday closing price.

Related: Next victim of Samsung's Note 7 disaster could be the environment

Moving deeper into the auto industry gives Samsung new scope for growth as its smartphone business faces a range of challenges.

After climbing rapidly for years, global smartphone shipments are expected to inch up just 1.6% in 2016, and they'll actually decline in developed markets like the U.S. and Canada, according to IDC forecasts. That's down from 10.4% growth last year.

Samsung, the word's largest smartphone maker, is also grappling with its own particular difficulties following the debacle involving its Galaxy Note 7 phone. The company decided to kill off the Note 7 last month after repeated complaints about the devices bursting into flames, dealing a heavy blow to its profits and reputation.</s>SEOUL (dpa-AFX) - Samsung Electronics (SMSN.L, SSNNF.OB, SSNLF.OB) agreed to acquire Harman International Industries Inc. (HAR) for $112.00 per share in cash, or total equity value of about $8.0 billion, the companies said on Monday.



The purchase price represents a premium of 28% based on HARMAN's closing stock price on November 11, 2016 and a 37% premium to HARMAN's 30-calendar day volume weighted average price ending November 11, 2016. Samsung expects to use cash on hand to fund the transaction. The agreement has been unanimously approved by the boards of directors of both companies.



The transaction, which is subject to approval by HARMAN shareholders, regulatory approvals and other customary closing conditions, is expected to close in mid-2017.



Upon closing, the transaction will immediately give Samsung a significant presence in the large and rapidly growing market for connected technologies, particularly automotive electronics, which has been a strategic priority for Samsung, and is expected to grow to more than $100 billion by 2025. 



HARMAN is the market leader in connected car solutions, with more than 30 million vehicles currently equipped with its connected car and audio systems, including embedded infotainment, telematics, connected safety and security. Approximately 65% of HARMAN's $7.0 billion of reported sales during the 12 months ended September 30, 2016 are automotive-related, and its order backlog for this market at June 30, 2016 was approximately $24 billion.



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 is pursuing a long-term growth strategy in automotive electronics, and plans to retain HARMAN's work force, headquarters and facilities, as well as all of its consumer and professional audio brands. 



Samsung said it will gain access to HARMAN's 8,000 software designers and engineers who are unlocking the potential of the IoT market.



Copyright RTT News/dpa-AFX</s>SEOUL, South Korea (AP) — Samsung Electronics' $8 billion acquisition of the U.S. auto electronics company Harman will instantly transform the South Korean tech company into a major player in the highly competitive and rapidly growing market for auto infotainment, software and connected car technology.

Samsung announced Monday that it would pay $112 per share in cash for the Stamford, Conn., company. It's Samsung's largest acquisition by far and it will put the company in a strong position as the race to develop autonomous vehicles barrels forward.

Harman International Industries Inc. is already is a $7 billion-in-sales per year player in the automotive market. It makes touch screens that control vehicle functions and infotainment systems, and it's dominant in automotive sound systems with brands such as Harman Kardon, JBL, Infinity and Mark Levinson.

In recent years Harman has used acquisitions to move into over-the-internet software updates and cyber security.

Harman complements Samsung's work in electronic displays and computer processors and, because of its established reputation in the auto industry, gives Samsung a strong foothold there, said Sam Abuelsamid, senior analyst for Navigant Research.

Samsung plans to keep Harman as an independent subsidiary and retain its management team, the companies said. That allows Samsung to enter the auto business with a different and well-established brand, avoiding any image problems because of the recent Samsung Galaxy Note 7 cell phone battery fires.

"They're looking for other revenue streams not necessarily as dependent on consumer perceptions," Abuelsamid said.

Sophisticated telematics systems will be in most new cars by 2020 to support over-the-internet software updates and other functions, Abuelsamid said. Since Harman already supplies screens and software, Samsung can get in the door to sell computer chips, he said.

The deal also positions Samsung well as car computers take on more and more driving functions while en route to fully autonomous cars, Abuelsamid said. Last month, Samsung bought artificial intelligence firm Viv Labs, founded by creators of Apple's Siri. It also recently bought a cloud service company, a mobile payments firm and a connected home startup.

"They're putting together a lot of the pieces that they could integrate to supply some of these companies," Abuelsamid said.

More than 30 million cars already are equipped with Harman components, and most of its sales for the year that ended Sept. 30 came from auto-related technologies.

"Upon closing, the transaction will immediately give Samsung a significant presence in the large and rapidly growing market for connected technologies, particularly automotive electronics, which has been a strategic priority for Samsung," the company said.

Samsung is a late-comer to the market for connected cars. In December 2015, the company made its ambitions for the self-driving car sector known by announcing that it will create a business division to focus on auto systems and components for autonomous driving.

Samsung follows other tech companies rushing into the automotive space.

LG, one of Samsung's biggest competitors, already has aggressively entered the market, and that may have motivated Samsung to spend $8 billion to propel its entry into the sector, Abuelsamid said. LG, through its LG Chem battery unit, supplies batteries for General Motors electric cars, and through that relationship, LG sold a lot of other components to GM for the Chevrolet Bolt electric car, he said.

Google has already developed autonomous cars and has been testing them for several years. Google and Apple also are already working with global automakers to supply their auto systems, CarPlay and Android Auto, to integrate smartphones into automotive electronics.
Samsung Electronics agrees to buy the U.S.-based Harman International Industries for $8 billion in the biggest overseas acquisition ever by a South Korean company.