It looks like that the deal for Samsung to buy Harman International may not happen as quickly and easily as everyone thought. Alexander Roepers, a large Harman shareholder owning around 2.3% of the shares, has decided to vote against the deal, stating that the $8 billion price just isn’t high enough.
This is a great illustration of one of the pitfalls of a public company being in a small niche like the audio industry. Almost everything about this deal revolves around “shareholder value” on Harman’s part. Harman’s board wants its stock to rise (which it did when the deal was announced) and Roepers wants to make more money from his stock. Samsung wants to get into the car business, where Harman is a leader.
The problem is that nowhere do you hear the phrase, “This is going to be better for our products and customers,” because the fact of the matter is that neither is considered much. See the disconnect?
Harman owns a who’s who of premier audio companies, including Crown, AKG, dbx, Lexicon, AKG, Digitech, BSS, JBL Professional, Soundcraft, Studer and Martin Audio, not to mention hi-fi companies like B&W, Harman Kardon, Mark Levinson, and Infinity. While that stable of audio companies might combine into a powerhouse, the fact of the matter is that this segment pales when compared to its Connect Car and Lifestyle Audio segments. Harman already supplies the audio systems for some of the top auto manufacturers, including Audi, Bentley, Mercedes, BMW, Chrysler, Fiat, Jaguar, Jeep, Toyota and Volkswagen, among others. That’s what Samsung is interested in, not the audio professional side of things, a fact that might eventually signal the demise of those companies.
The fact of the matter is that Samsung needs this deal more than Harman, so expect it to happen after the price is raised. Keep your fingers crossed that the great audio companies involved eventually don’t disappear.