Samsung in $8bn deal for US audio company Harman International

Samsung buys Harman International in a bid to drive into connected cars

Electronics giant Samsung has unveiled plans to acquire US audio specialist Harman International for $8bn in a bid to extend its presence in the so-called connected car market.

Harman predominantly focuses on audio products under the Harman/Karden, JBL and AKG brands. In recent years, though, it has has also expanded into connected car systems, as an extension to the in-car audio electronics that it supplies to car makers.

The move will therefore give Samsung an entree into the connected vehicle space almost overnight.

"As a Tier 1 automotive supplier with deep customer relationships, strong brands, leading technology and a recognised portfolio of best-in-class products, Harman immediately establishes a strong foundation for Samsung to grow our automotive platform," said Samsung Electronics CEO Oh-Hyun Kwon.

Samsung elaborated on this by saying that it could work with Harman to focus on several areas of connected car technology, covering infotainment, cyber security, over-the-air updates and telematics.

Young Sohn, president and chief strategy officer of Samsung Electronics, explained that the deal is the perfect fit for both firms.

"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," he said.

The deal is expected to close in mid-2017 at which time Harman will continue to operate as a standalone subsidiary at Samsung, and be led by current Harman CEO Dinesh Paliwal.

"Combining Samsung's strengths in leading-edge displays, connectivity and processing solutions with Harman's technology leadership and long-standing customer relationships will enable OEMs to provide new offerings for their customers," said Paliwal.

"Partnerships and scale are essential to winning over the long term in automotive as demand for robust connected car and autonomous driving solutions increases at a rapid pace.

"This transaction will bring Harman and Samsung's complementary strengths together to accelerate innovation in this space."

Samsung will be keen for the deal to boost revenues in the future, especially after its usual cash cow of smartphone sales took a huge hit this year when the company had to stop sales of the Note 7 owing to fire risks.

In the 1990s, Samsung set up its own car manufacturing subsidiary, producing its first vehicles in 1998. However, the company was forced to sell-out when the Asian financial crisis saw funding dry up almost overnight.