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November 14, 2016
martinwolf  Transaction Analysis
Samsung to Buy Harman International Industries
 
Financial Information
  • Enterprise Value                           $8.6 billion
  • EV/LTM Revenue                         1.22x
  • EV/LTM EBITDA                          10.16x 
Transaction Facts
  • Samsung Electronics (KOSE: A005930) announced Monday that it entered into an agreement to acquire Harman International Industries (NYSE: HAR), a US technology manufacturer with a strong automotive presence.
  • The deal values Harman at $112 per share in cash, a 28% premium over the company's Friday closing price. Harman shares rose 25% today, closing at $109.72 per share.
  • Harman is itself the product of several significant acquisitions, growing from its audio roots into software development and car connectivity technology. Last year it acquired technology providers Symphony Teleca and Red Bend Software for $780 million and $170 million, respectively, boosting wireless connectivity capabilities.
  • Samsung has historically not been a significant participant in M&A, but has recently bought SmartThings, LoopPay, Joyent and other technology and related services providers.
Branching Into a Massive Market
  • Not Just a Phone Company: Samsung's heavy reliance on smartphones has caused significant concern, especially with the Galaxy Note 7 fiasco earlier this year. Cars today include screens, chips and other electronics produced by Samsung - and Harman's dominant market position will help the company leverage a growing industry. Last month, Qualcomm agreed to acquire NXP Semiconductors for $39 billion - giving it control of the largest chip developer for automobiles in a similar diversification move.
  • Traffic Jam: Samsung is jumping into an industry long-courted by other tech giants, but it is staying safely away from the expensive and risky bleeding edge favored by other tech manufacturers. Alphabet has long researched self-driving cars, while Apple's top-secret Project Titan is widely thought to be its own version of a self-driving car. 
  • Culminating a Long Process: Samsung's first exposure to the automotive industry came in 1994 when the company started Samsung Motors (in which it retains a minority interest following a sale to Renault). But this transaction represents the conclusion of a task force organized last year to identify the best way to secure an established presence in what was seen as key market.
For more information about this transaction,  click here to read the press release.

martinwolf was not the advisor in this transaction.

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About martinwolf    


With offices in New York and the San Francisco Bay Area, martinwolf is a leading M&A Advisory focused on middle market companies in the IT Services, IT Supply Chain, IT-Enabled Business Process Outsourcing and Software as a Service (SaaS) space. Since 1997, our team has completed more than 140 transactions in nineteen countries and sold seven divisions of Fortune 500 companies. 

 

martinwolf is a member of FINRA and SIPC. For more information, visit www.martinwolf.com.  

 

To learn more about martinwolf, contact Matthew Putzulu at mputzulu@martinwolf.com.

 

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