Samsung Electronics has agreed to buy Harman International Industries in an $8 billion deal, making a major push into the auto electronics market and the biggest overseas acquisition ever by a South Korean company.
The transaction highlights Samsung’s effort 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.
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 — scared 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.
Samsung, a maker of chips, displays, smartphones and TVs, agreed to acquire Harman for $112 per share in cash, a 28 percent premium to the U.S. company’s closing the day before.
“Harman was missing, in our opinion a meaningful presence in displays and cockpit electronics; Samsung has these,” Baird Equity Research said in a report.
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, according to the website.