Samsung to buy car tech company Harman for $8 billion

Samsung Electronics announced an $8 billion deal on Monday to buy Harman International Industries, in an all-cash deal that makes Samsung a major player in the world of automotive technology.

The electronics giant previously shunned big acquisitions, and the latest deal underscores a strategic shift as the company tries to break into the high-barrier automotive industry where it has little track record.

As part of the deal, which is subject to approval by Harman shareholders, Harman will remain an independent subsidiary of the technology giant. Samsung will pay $112 a share in cash for Harman, which generated roughly $700 million in net profit on $7 billion of revenue last year. Stamford, Connecticut-based company provides connected cars and audio systems with safety and entertainment features. More than 30 million cars are equipped with its auto systems.

"An M&A deal this big is a first for us. But it shows that under Jay Y. Lee, the company is changing and open to new ways to grow," a source familiar with the deal told Reuters, referring to Samsung Electronics' vice chairman.

Harman Chairman Dinesh Paliwal stated, “This compelling all-cash transaction will deliver significant and immediate value to our shareholders and provide new opportunities for our employees as part of a larger, more diversified company,” he said.

“Samsung is an ideal partner for Harman and this transaction will provide tremendous benefits to our automotive customers and consumers around the world.”