Executive Summary

Acquisition of Harman Industries by Samsung

Submitted by Group: B9

Despite its explosive growth, Samsung has mostly preferred to buy smaller start-ups or develop
its own technology. That changed on November 2016 when the company purchased Harman
International Industries, Incorporated for about $8 billion.

The acquisition will make the South Korean tech giant immediately a tier-1 parts supplier to
global car makers that use Harman infotainment components such as GM. Samsung will
leverage Harman's networks to likely expand its supply of displays and semiconductors to cars.

Harman on the other hand is a giant in its own segment, as Harman is the company behind
audio brands like AKG, Becker, BSS, Crown, dbx, DigiTech, Harman Kardon, Infinity, JBL,
Lexicon, Mark Levinson, Revel, Selenium, Soundcraft, Studer. But entertainment audio is only
approx. a third of their business. To a much bigger degree, Harman is a major in-car
infotainment supplier to the automotive industry. Approx. 65% of the sales they generate is
related to cars

This acquisition has been the biggest for the Samsung too so far, where it paid $112 for each
stockholder of the Harman industries. With this Samsung has entered the audio equipment of
automobile sector and also the acquisition has made the Samsung tier-1 supplier of audio
equipment through Harman. As Samsung were lagging behind others in the area of audio
electronics equipment, Samsung’s strategy was to become a key-supplier for the evolving
automotive industry through audio equipment.

As Samsung has realized the value of connected cars, especially in the last years as it became
clear that connected cars will transform the future of automotive and transportation. Established
car-companies have to acquire a lot of know-how to catch up with this trend, as it did not evolve
inside of their own industry but from outside (i.e. Silicon Valley).

This study undertakes the analysis of the various strategies which would have caused the
acquisition. Also, the future for Harman industries with the changed strategies and the potential
growth of Samsung through this acquisition.