Samsung Electronics’ $8 billion acquisition of the U.S. auto electronics company Harman will instantly transform the South Korean tech company into a major player in the highly competitive and rapidly growing market for auto infotainment, software and connected car technology.
Samsung announced Monday that it would pay $112.00 per share in cash for the Stamford, Connecticut, company. It’s Samsung’s largest acquisition by far and it will put the company in a strong position as the race to develop autonomous vehicles barrels forward.
Harman International Industries Inc. is already is a $7 billion-in-sales per year player in the automotive market. It makes touch screens that control vehicle functions and infotainment systems, and it’s dominant in automotive sound systems with brands such as Harman Kardon, JBL, Infinity and Mark Levinson.
In recent years Harman has used acquisitions to move into over-the-internet software updates and cyber security.
Harman complements Samsung’s work in electronic displays and computer processors and, because of its established reputation in the auto industry, gives Samsung a strong foothold there, said Sam Abuelsamid, senior analyst for Navigant Research.
Samsung plans to keep Harman as an independent subsidiary and retain its management team, the companies said. That allows Samsung to enter the auto business with a different and well-established brand, avoiding any image problems because of the recent Samsung Galaxy Note 7 cell phone battery fires.
“They’re looking for other revenue streams not necessarily as dependent on consumer perceptions,” Abuelsamid said.
Sophisticated telematics systems will be in most new cars by 2020 to support over-the-internet software updates and other functions, Abuelsamid said. Since Harman already supplies screens and software, Samsung can get in the door to sell computer chips, he said.
The deal also positions Samsung well as car computers take on more and more driving functions while en route to fully autonomous cars, Abuelsamid said. Last month, Samsung…