The addressable connected car market is expected to exceed $100 billion by 2025. If this is the case, Samsung’s move is a smart one.
After acquiring the automotive electronics-maker Harman International Industries for $112.00 per share (or $8 billion in cash) it will make great strides into this growing market.
The deal will be concluded by mid-2017 and Harman’s chief executive, Dinesh Paliwal, will continue to run the company.
Samsung called this move a “strategic priority” for the company and will help create end-to-end solutions by combining Harman’s leadership in infotainment, telematics and sound management with Samsung’s connected mobility solutions, semiconductors, user experience (UX) and displays.
The acquisition will accelerate development and time to market for connected car and autonomous driving innovation, according to Samsung.
This will lead to substantial growth opportunities across the automotive, audio, IoT and professional markets.
It is a move that makes sense for Samsung, after its pride was dented by the catastrophe surrounding the Galaxy Note 7, but also because Harman is a leading player in the connected car industry.
Approximately 65% of HARMAN’s $7 billion of reported sales during the 12 months ended September 30, 2016 are automotive-related, and its order backlog for this market at June 30, 2016 was approximately $24 billion.
“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,” Young Sohn, Samsung’s president and chief strategy officer, said in a statement.
“Harman perfectly complements Samsung in terms of technologies, products and solutions, and joining forces is a natural extension of the automotive strategy we have been pursuing for some time,” concluded Oh-Hyun Kwon, vice chairman and chief executive officer of Samsung Electronics.