Samsung has announced this morning it’s buying US audio company Harman in an all-cash deal worth $8 billion. This will be Samsung’s biggest acquisition to date when the deal closes.
You have almost certainly heard the name Harman when it comes to audio products, but the company has spent the last few years getting big into automotive technology as well. That’s what piqued Samsung’s interest in the company.
Samsung has been expanding into the automotive sector, buying a stake in electric-car maker BYD Co. and considering an offer for sections of Fiat Chrysler Automobiles NV’s parts unit, a deal said to have broken down just weeks ago. Harman has significant experience in designing and integrating sophisticated in-car technologies and it already has deep relationships with some of the largest car manufacturers in the world.
Samsung says its expertise in displays, user interfaces, and semiconductor technology would create “significant growth opportunities” for Harman’s auto-parts business. The latter company, which owns a number of brands including Harman Kardon, AKG, and JBL, is expected to double its revenue over the next five years. The firm recently struck large deals with conglomerates including Fiat Chrysler and General Motors, and as of June 30th this year had a backlog of orders worth approximately $24 billion.
The size of this deal shows how desperate Samsung Electronics is for growth drivers. So far the only significant growth it has seen has been in the company’s Galaxy smartphones and the Note 7 proved why Samsung can’t get complacent with just smartphones.
As for Harman’s consumer electronics activities, Samsung expects them to “enhance” its mobile, display, virtual reality, and wearable products. That could potentially mean Harman/Kardon-branded Galaxy devices, though Samsung’s brand is definitely strong enough to stand on its own.