Samsung Continues Automotive Push with Harman Acquisition

South Korea’s Samsung Electronics Co. says it has reached an agreement to buy Stamford, Conn.-based audio and telematics giant Harman International Industries Inc. for about $8 billion.

Samsung says Harmen’s portfolio of infotainment, telematics, cyber security and over-the-air update capabilities complements its own expertise in connectivity technologies, such as 5G communications and display systems. Samsung also will get access to Harman’s 8,000 software designers and engineers.

The all-cash deal is expected to close by mid-2017. It comes about a month after Samsung dropped plans to purchase all or part of the Magneti Marelli parts unit of Fiat Chrysler Automobiles NV. That deal was nixed in part because Samsung had to refocus its attention on problems that caused it to discontinue its just-introduced Galaxy Note 7 smartphone.

Last December Samsung created a business team to identify opportunities to help it expand its automotive operations. In July the company’s Shanghai Samsung Semiconductor unit acquired a 3 billion-won ($449 million) stake in Chinese electric carmaker BYD Co.

The Harman deal is said to be the largest overseas acquisition to date by a single South Korean company. Upon closing, Harman will operate as a stand-alone subsidiary led by current CEO Dinesh Paliwal.

Harman reported sales of $7 billion for the fiscal year ending September 30, of which about two-thirds was derived from the auto industry. The company says it had an automotive order backlog of $24 billion this summer.

In addition to its namesake Harman Kardon brand, Harman also markets JBL, Mark Levinson, Infinity, Revel and the Bang & Olufsen systems. Earlier this year Harman expanded into telematics and connectivity products with two acquisitions. It purchased Mountain View, Calif.-based Symphony Teleca Corp. for $780 million and Waltham, Mass.-based Red Bend Software Inc. for $170 million.