The deal has made Samsung a major player in the automotive industry
The South Korean tech giant, Samsung, is planning to penetrate in the electric car industry. Samsung recently came under the limelight as it recently announced that it bought an auto product maker Harman in an all cash deal that worth $8 billion.
Many tech gurus believe that the South Korean is trying to branch out beyond smartphone industry due to Samsung’s Note 7 fiasco. Adding to that, as per the terms of the acquisition deal, Samsung will pay $112 per share, which is considered as a healthy premium of the current share price of Harman that is $87.65. Also, the transaction is expected to close by mid-2017 and around that time Harman will operate as a standalone company of Samsung.
“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,” Oh-Hyun Kwon, Vice Chairman and Chief Executive Officer of Samsung Electronics, said in a statement
Interestingly enough, the expertise of the South Korean tech giant in user interfaces, displays and semi-conductor technology would certainly offer significant growth opportunities to Harman’s auto parts business. Also, many industry experts believe that this deal will help Harman will experience significant increase in its revenue over the next five years.
Moreover, the push of the South Korean tech giant in the automotive industry will bring it with head-to-head competition with other tech giants such as Google and Apple. Even though the main focus of users is on self-driving capabilities, embedding vehicles with connected technology could prove to be immediately lucrative. Also, it was reported earlier this year that Apple has dropped its plan to make its own automated vehicles in favor of developing a software for existing automakers.
“We think technology is more critical than being in the metal-bending business,” Young Sohn, Samsung’s strategy chief, said in a September interview. “If Apple wants to build cars, we want to be their supplier; Detroit, too. Anybody.”
The tech giant which had a war chest of approximately $71 billion by the end of September, had proved itself to be willingness to position itself as a dominant force in the automotive industry. Also, the acquisition deal has made Samsung a major player in the automotive industry.