Samsung announced that it's going to buy Harman International Industries. The $8 billion deal is both big and significant for the tech company. Samsung is looking to break into the automotive industry. The said acquisition indicates how the company is keen on expanding its market. It seems to capitalize on the growing industry of electric cars.
Samsung And Harman's Deal
Samsung posted on its website that the deal has been unanimously approved by both the companies' Board of Directors. Though it is still subject to approval by Harman's shareholders. The transaction is expected to be completed in mid-2017.
The tech company's decision to acquire Hamran is reflected by a source familiar with the deal. According to Reuters, the source revealed that Samsung is open to new ways to grow. A big agreement like the tech giant has with Harman is part of adapting to change.
The source added that this is the company's state under Samsung Electronics' Vice Chairman Jay Y. Lee's leadership.
Samsung Beyond The Smartphone Market
Samsung is still the king of smartphones ahead of Apple. However, its revenue has declined. Though the sales of its Galaxy S7 and S7 Edge have saved the company. This is considering the whole Galaxy Note 7 fiasco. The infamous phone explosions have put Samsung in a bad light to some people.
The question is whether it has a direct effect on Samsung's smartphones sales or not. It should be noted that the whole smartphone market seemed to have slowed. Other smartphone makers like Apple has also experienced a decline in sales.
It may be the right time for Samsung to expand its biggest market. Venturing into the automotive industry is not a bad strategy.
The Role Of Harman's Acquisition
Samsung and Harman are a perfect fit. Harman has been making products for automakers that include connected car and audio systems. According to the USA Today, Senior Market Analyst Jack Wetherill of the Futuresource Consulting explained the possible reason behind Samsung's acquisition. Wetherill said that the Korean-based company will definitely benefit.
Samsung could start its venture into the automotive industry through Harman. This is further reflected by BMO Capital Markets analysts Tim Long and Ambrish Srivastava. They said that Samsung is interested in having access to Harman's relationship with automakers.
