Samsung Electronics said Monday it has agreed to acquire U.S. auto parts maker Harman International Industries for $8 billion in a bid to enter the growing market for “connected” cars.
Board members of Samsung — the world’s largest producer of smartphones — approved to pay $112.00 per share in cash for the Stamford, CT.-based company, a statement said.
The deal will give the South Korean giant a “significant presence” in the global market for online-connected auto parts, the firm said.
“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,” Samsung vice chairman Kwon Oh-Hyun said in a statement.
“Harman immediately establishes a strong foundation for Samsung to grow our automotive platform.”
Harman provides connected cars and audio systems with safety and entertainment features. More than 30 million cars are equipped with its auto systems. The majority of its $7 billion in annual sales during the year that ended Sept. 30 came from auto-related technologies.
Samsung Electronics — the flagship unit of the Samsung Group — produces a wide range of electronics from smartphones to home appliances and semiconductors.
The latest deal will offer the firm a chance to combine Harman’s expertise in high-tech auto parts and its own mobile and semiconductor technologies, Samsung said.
The company is hoping to complete the deal, the biggest in its history, by the third quarter of 2017 after getting approvals from Harman shareholders and regulators.
The deal will provide a chance for the tech titan to move past the exploding Galaxy Note 7 crisis that is expected to cost it billions of dollars as well as it cherished reputation.
It also came as the firm seeks new sources for growth beyond its key business of mobile handsets as the market slows.
Samsung in September announced a recall of millions of Note 7s after it emerged they were susceptible to overheating and exploding. The problem was exacerbated when it was discovered replacement gadgets were also blowing up and it discontinued the handset.
Samsung last year established a new automotive electronics business team, which will work closely with Harman, Samsung said.
The market for smart, connected electric vehicles including self-driving cars would grow by an average of 13 percent each year to 186.4 billion dollars by 2025, it added.