Samsung Electronics Co.’s has unveiled plans to acquire, American automotive technology company, Harman International Industries.The $8 billion deal announced on Monday, November 14, is expected to close in mid-2017.
This development marks Samsung’s plan to increase its presence in the industry, joining other technology companies such as Apple and Google looking to capitalise on the market for in-car tech.
It will also deepen Harman’s pockets and access to consumer-facing technology, as the supplier grows and acquires companies specialising in software, cloud technology and cyber security.
“Without a doubt, this will be a huge differentiator for us,” Harman CEO Dinesh Paliwal told Automotive News.
As the industry moves toward autonomous driving and connectivity, in-car technology has become increasingly valuable. In September, Elliot Garbus, general manager of the transportation solutions division at Intel, said the in-vehicle content industry could be worth up to $5 billion.
About 65 percent of Harman’s $7 billion in sales for the year ending in September were from its automotive sector, which specializes in embedded infotainment, telematics and connectivity, according to the company.
It has an additional $24 billion in future orders from automotive companies. Under the current terms, Harman will remain a standalone operation.
In August, Samsung was reported to have been considering a deal with Fiat Chrysler Automobiles-owned Magneti Marelli, but analysts have deemed the Harman merger a better fit for the consumer electronics giant.
“These companies fit together like a glove on a hand,” said David Leiker, an analyst at Baird Equity Research, in a note to investors.
With access to Samsung’s display and audio technology, Harman will have a major advantage in developing complete cockpit systems, while its competitors will have to continue to rely on traditional component suppliers, said Mark Boyadjis, an analyst at IHS Automotive.
“They can now go to OEMs and say ‘we’ve got a complete platform and an entire cockpit design.’ That will drive Harman further than they already are,” Boyadjis said.
The supplier will hold 10 percent of the technology supplier market by revenue in 2022, and is expected to grow even more under Samsung, according to IHS Markit estimates.
