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Samsung to Buy Harman International in an $8 Billion Bet on Cars

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Old 11-14-16, 06:22 PM
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Default Samsung to Buy Harman International in an $8 Billion Bet on Cars

South Korean electronics giant Samsung looks to very quickly get up to speed in the highly-competitive smart car business with its $8 billion acquisition of U.S. car and audio systems supplier Harman International

In an all-cash deal, Samsung will buy the Stamford, Conn.-headquartered firm for $112.00 per share. It is the biggest acquisition in Samsung's history, the company said. Shares of Harman (HAR) surged 25% Monday to $109.96.

Automotive electronics is expected to grow to more than $100 billion by 2025, estimates Samsung, which has made the segment a strategic priority. But the electronics titan — hit in recent weeks by the recalls of its Galaxy Note 7 smartphoneand some washing machines with tops that could detach — is playing catchup in smart cars to competitors such as Apple, which has a CarPlay feature available in a growing number of vehicles, and Google and its Android Auto in-car platform.

With Harman, expected to operate as a standalone subsidiary after the deal is completed, Samsung gets a tech company that has developed its own auto software platform for personal assistants, cybersecurity, navigation and infotainment, and has relationships with automakers ranging from Audi to Volkswagen.

"The primary motivator for Samsung’s purchase of Harman is to tap into its automotive business," said Jack Wetherill, senior market analyst at Futuresource Consulting. "This is absolutely about the connected car. Harman are major players in this business and Samsung are not. They know they need to get into it to leverage their IoT (Internet of Things), their smart home and smartphone businesses to effectively spread, develop and maximize their revenues and potential."

The deal, which is subject to approval by Harman shareholders and regulators, is expected to be completed in mid-2017.

“We see substantial long-term growth opportunities in the auto technology market as demand for Samsung’s specialized electronic components and solutions continues to grow,” added Young Sohn, Samsung Electronics president and chief strategy officer.

BMO Capital Markets analysts Tim Long and Ambrish Srivastava kept Samsung stock's "market perform" rating in a note to investors Monday and said "the deal makes strategic sense."

Samsung, they said, "is primarily interested in expanding its share of in-car technology and having access to" Harman's relationships with auto makers.

As smart cars evolve into self-driving or autonomous cars — a movement led by Tesla but joined by many other companies including Google and Ford — Samsung will benefit doubly, as Harman's involvement goes beyond auto technologies to in-car audio and entertainment. "They are missing a trick and they know this," Wetherill said.

Harman has several well-known and respected audio brands including JBL, Mark Levinson and Infinity. "Samsung have aspired to this type of market but just simply haven't had the background to get to that place," he said.

The announcement comes after October's massive recall of Samsung Galaxy Note 7s, which posed a fire risk related to the smartphone's battery. Samsung has also announced a voluntary recall of 2.8 million top-loading washing machines because the top of the machine could detach and cause injury when running a high-speed cycle.
http://www.usatoday.com/story/money/...lion/93786364/
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Old 11-14-16, 06:54 PM
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Will Toyota and Lexus be looking for a new supplier for its high-end vehicle audio systems (JBL, Mark Levinson)?
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Old 11-14-16, 08:33 PM
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Originally Posted by Sulu
Will Toyota and Lexus be looking for a new supplier for its high-end vehicle audio systems (JBL, Mark Levinson)?
Doubt it.... Harman will continue to operate as it does today, just with new ownership. Harman also owns nearly all of the automotive premium audio suppliers.
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Old 11-15-16, 01:35 PM
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Originally Posted by pbm317
Doubt it.... Harman will continue to operate as it does today, just with new ownership. Harman also owns nearly all of the automotive premium audio suppliers.
I'm surprised Yamaha never got more into car audio seeing as they have expertise in instruments, sound engineering, and engine tuning.
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Old 11-15-16, 08:15 PM
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So, will the sound system head units catch fire?
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Old 11-16-16, 05:48 AM
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This gave me a reason to look at who they are supplying overall

alfa, audi, Bentley, MB, bmw, effin chrysler, ferrari, fiat, Harley, jag, heep, Lamborghini, Land Rover, mini, Porsche, rolls, seat, skoda

then they have branded partnerships

mark Levinson in Lexus, lexicon in Hyundai and Kia, revel in lincoln, bowers and Wilkins in bmw, Volvo and maserati

They also have the jbl and Harmon lardons brands to sell components for the aftermarket installs from my limited knowledge of the space, I think b an o still has some audi relationship, burmeister is in MB, Panasonic does acura, Bose has infiniti and caddy

i have hoped that focal would get involved in car audio on the speaker side as a partner in addition to their after market business

a funny one that came and went was Macintosh in Subaru




I like the deal for Samsung for the following reasons:

they will ill be able to feature whatever platform they are offering on their phones in cars to fight Apple CarPlay

they will be able to attack Bose vigorously
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Old 11-17-16, 07:53 PM
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Is Harman in Audi? My system is Bang & Olufsen.
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Old 11-17-16, 08:03 PM
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I believe Harman provides the infotainment stuff.

It looks like the speakers are the B and O aspect of the package.
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