Samsung buys Harman for $8 billion to gain connectivity know-how

With one fell swoop, the South Korean giant takes hold of a great chunk of tech.

The South Korean conglomerate Samsung struck a deal to acquire Harman Industries for $8 billion. The giant company known for its mobile phones has offered Harman $112 per share, at a 28-percent increase on Harman stocks' closing price on Friday.

In its announcement, Samsung reports 65% of Harman's sales in the last year were automotive-related, as Harman's products include vehicle technologies and connectivity in addition to the audio products consumers know it for. Harman is now a major player in the much-vaunted Internet of Things space, and it reportedly employs 8000 software designers and engineers. Harman also houses a great deal of audio brands under its umbrella. In addition to Harman Kardon: JBL, Mark Levinson, AKG, and Infinity, to name a few. Harman also licenses Bowers & Wilkins and Bang & Olufsen brands for automotive purposes.

Harman is a Connecticut-based company derived from the high fidelity audio brand Harman-Kardon, founded in 1953. Its founder, Sidney Harman, retired in 2007,and passed away in 2011 at the age of 92. Samsung plans to retain Harman's employees, headquarters and facilities, as well as all of its audio brands. The deal is subject to shareholder approval and is expected to be finalized by mid-2017. Following the deal, Harman will operate as a standalone, self-led Samsung subsidiary with its management intact.

As per Samsung's announcement today, "the transaction will immediately give Samsung a significant presence in the large and rapidly growing market for connected technologies, particularly automotive electronics." Samsung already has its foot in the door regarding car-making, as it owns nearly 20% of Renault-Samsung Motors, a South Korean joint venture with some Nissan input and Nissan-derived model history.

Samsung has been increasingly eager to take a larger hold of automotive development, as it acquired a two-percent stake worth $455 million of the Chinese electric car maker BYD in July, in addition to which there have been talks with FCA's Magneti Marelli parts supplier. To better drive this expansion, Samsung formed what it calls its Automotive Electronics Business Team in 2015.

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