Samsung has announced its largest acquisition since the company’s founding in 1938, with the South Korean technology conglomerate announcing a takeover of Harman International, the automotive and AV manufacturer.

Harman International comprises of over 20 brands, including the likes of AKG, JBL, Mark Levinson and Revel. For over 30 years the company has been a juggernaut in the AV world, partly thanks to a string of acquisitions in the 80s. Through its speaker brands Harman has been able to develop significant foot-print in both the residential and commercial installation markets and offers a product for just about any AV installation.

Despite having a huge following in the world of AV, the company has recently been concentrating more on its automotive business. In Q3 2016 the company boasted sales of $1.6 billion. Its connected car division was responsible for $767 million worth of sales, while the company’s lifestyle audio brand brought in $473 million. Despite the large gap in sales, much of the audio revenue was still attributed to the company’s success in the automotive market and its acquisition of Bang & Olufsen Automotive.

Announcing its acquisition of Harman, Samsung specifically stated that it was interested in accelerating growth in automotive technology. To enable this, Samsung has agreed to pay $8 billion to acquire all of Harman’s brands.

Harman is already the world leader when it comes to connected car solutions. The company’s technology can be found in more than 30 million vehicles currently on the road and in terms of yearly revenue, 65% of the money coming into the company’s coffers comes from its automotive business.

So why is Samsung acquiring the entirety of Harman and not solely its automotive business? Well, Samsung says that there’s a great deal of synergy to be had between the two companies. After all, the South Korean giant already manufacturers a wide range of AV gear – including speakers, TVs and AV receivers.

Samsung doesn’t just plan on bolstering its own AV gear however. The company has also stated that it hopes to bring Harman’s famous brand names to some of its best known product lines – including smartphones, virtual reality headsets and other wearables.

It’s not just the consumer-facing products that are set to be complemented by Harman’s range of AV products either. Samsung is already one of the largest commercial AV companies in the world, with the company constantly showcasing its love for the market with the largest stand at ISE in Amsterdam. The Harman acquisition will help the company grow in the commercial space even further, with Samsung hoping to deliver integrated, large-scale audio and visual professional solutions to stadiums, concert facilities and other performance centres around the world.

Despite the synergies, Harman is set to operate separately and have its own corporate structure. While it will still be a Samsung subsidiary, Harman’s current management team, workforce, headquarters and facilities will all be retained after the acquisition is complete.

It’s clear from this acquisition that Samsung is less interested in the AV side of the business than the automotive side however.

“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,” notes Oh-Hyun Kwon, vice chairman and chief executive officer of Samsung Electronics.

“As a Tier 1 automotive supplier with deep customer relationships, strong brands, leading technology and a recognised portfolio of best-in-class products, Harman immediately establishes a strong foundation for Samsung to grow our automotive platform. Dinesh Paliwal is a proven global leader and, in our extensive discussions, we have developed deep respect for him, his strong senior leadership team and Harman’s talented employees. Harman sustained track record of rapid growth fueled by technology leadership and an unmatched automotive order pipeline reflects its commitment to innovation and customers.”

Dinesh Paliwal, Harman chairman, president and CEO, adds: “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.  Today’s announcement is a testament to what we have achieved and the value that we have created for shareholders.  Samsung is an ideal partner for Harman and this transaction will provide tremendous benefits to our automotive customers and consumers around the world.

“Combining Samsung’s strengths in leading-edge displays, connectivity and processing solutions with Harman’s technology leadership and long-standing customer relationships will enable OEMs to provide new offerings for their customers. Partnerships and scale are essential to winning over the long term in automotive as demand for robust connected car and autonomous driving solutions increases at a rapid pace. This transaction will bring Harman and Samsung’s complementary strengths together to accelerate innovation in this space. More broadly, this investment underscores the strength of Harman’s employees, as well as our success and leadership across our markets. We look forward to working together with Samsung to elevate experiences for consumers worldwide.”

Alongside Samsung’s weak interest in the AV side of Harman, it’s not the only division getting the cold shoulder. Throughout its entire acquisition statement Samsung failed to even mention automation brand AMX. AMX was famously acquired by Harman in 2014, but it seems that Samsung has yet to show an interest in any of the company’s automation offerings.

Samsung already has a smart home system, known as SmartThings, so it’s entirely possible that the company will leverage AMX’s know-how to bolster its own ecosystem. CE Pro Europe has reached out to AMX to find out exactly what the future lies, but until then, it seems that AMX is being left in the cold.

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