Earlier this year Samsung invited me to California to see its impressive new audio research facilities. During that visit, the company indicated its desire to be regarded as the top audio brand in the world. Now, with the announcement that they will purchase Harman—which is the world's largest audio company—that goal may be achieved sooner than I had imagined. Harman is the parent company of many well-known audio brands including JBL, AKG, Crown, Infinity, Mark Levinson, Lexicon, and Revel.
Samsung's $8 billion purchase of Harman will be the company's largest-ever acquisition.
The $8 billion, all-cash deal will be the largest acquisition in Samsung's history. Typically, the company develops its technologies internally, but it also has $71 billion in cash to spend. The Wall Street Journal duly notes
that the primary motivation for the acquisition was Harman's penetration into the automotive market. And yet, what Samsung is buying is the whole shebang, not just parts of the company.
Revel speakers is one of the brands Harman picks up with this acquisition.
JBL is perhaps the most recognizable of all the Harman brands Samsung will own.
Regarding Samsung's interest in Harman's automotive-related tech, Young Sohn, the president and chief strategy officer of Samsung Electronics said "The vehicle of tomorrow will be transformed by smart technology and connectivity in the same way that simple feature phones have become sophisticated smart devices over the past decade." Even so, the company plans to retain Harman's current staff and mix of brands, stating that "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."
On the business side of things, automotive-related sales currently account for 65% of Harman's revenue. The purchase appears to simultaneously be a bargain for Samsung and a boon for Harman. Samsung is offering to pay $112 per share for Harman stock, which represents a nearly 30% markup over its current price. However, Harman shares had been selling for almost $150 last year, but had dropped due to weakness in the Pro audio segment, where its JBL and Crown brands have a huge presence. The company says it will work to bolster that aspect of its business.
Samsung plans to keep Harman intact, with current CEO and President Dinesh Paliwal in charge of the operation. But, it also sees plenty of opportunity going forward when it comes to the portfolio of audio brands it will pick up. The company notes that "Harman’s leading brands and cutting-edge audio systems include JBL, Harman Kardon, Mark Levinson, AKG, Lexicon, Infinity, and Revel. The company also licenses Bowers & Wilkins and Bang & Olufsen brands for automotive. All of these brands will greatly enhance the competitiveness of Samsung’s mobile, display, virtual reality and wearable products to deliver a fully differentiated audio and visual experience for customers."
The fact that Samsung will own JBL and various other major audio brands is just now sinking in. This acquisition covers the entire gamut from inexpensive consumer goods to the largest professional AV installations, and covers car audio as well as high-end audio. The deal does require the approval of Harman shareholders, but it has already been "unanimously approved by the boards of directors of both companies," says the press release. The deal should close sometime in mid-2017 after "regulatory approvals and other customary closing conditions" are complete.
Here's a link to the full press release: https://news.samsung.com/global/sams...d-technologies
* Please note that I posted this in the "Speakers" forum because so much of what Harman does has to do with speakers thanks to JBL and Infinity and Revel. But, the reality is that this deal encompasses much more than speakers, and the comments/discussion may reflect that.