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Harman Agrees to $7.8 Billion Buyout

by Clint DeBoer — April 26, 2007

Contributors: J. Walker Clarke

Harman International

Harman International Industries Inc. said it agreed to be acquired by Kohlberg Kravis Roberts and the private-equity arm of Goldman Sachs Group Inc. in a deal valued at roughly $7.8 billion.

The Washington, D.C.-based Harmon is the parent company for the popular Harman Kardon, JBL and Infinity brands which extend into the automotive, pro audio, and home theater industries.

Under the agreement, Harman shareholders can elect to exchange their shares for $120 a share in cash, or for shares of the new company. The bid can be calculated as being 17% over the current share price as of this week ($102.56 NYSE). The terms of the deal also permit the company to solicit other proposals over the next 50 days.

The transaction was unanimously approved by the Harman Board of Directors, following the recommendation of a Special Committee of independent directors. KKR initiated discussions with Harman and structured the transaction so that current Harman stockholders have the opportunity to participate in the future upside potential of the enterprise. The company will continue to be named Harman International Industries and Dr. Sidney Harman, Founder and Executive Chairman, will remain Executive Chairman (and currently owns 5% of the company's shares).

Dr. Harman stated: “We are pleased to reach an agreement with KKR and GSCP that is in the best interest of our stockholders, presenting them with excellent value for their shares and the opportunity to participate in Harman’s future growth. KKR and GSCP are two of the world’s leading private equity investors and our Board of Directors strongly believes that this transaction will create attractive long-term opportunities for our employees, customers and business partners. Together, we will continue to execute our strategic plan, capitalize on new opportunities, and build on our history of product innovation and service excellence.”

For more information, please visit www.harman.com.

Discuss This Article

pikers posts on April 27, 2007 15:31

nav, post: 265609
Crown (pro-audio) and Revel (higher end speakers) are two more Harman companies.

I wonder how Harman et al will be changed by this? For various reasons, I have the opinion that Harman is a progressive name in the audio fields but that their brands are poorly marketed. For instance, the general perception of Harman Kardon's increasingly poor quality control, whether true or not, is ultimately a marketing problem. In the consumer realm, JBL and Infinity are continuously drifting toward making the same class of products and relatively few know about Revel, leaving a gap in the middle of their consumer product range. I also do not think JBL's pro-audio equipment effectively brings its high-end connotation down to their consumer lines. A lot of potential without a grand plan it may seem.

I don't think you could have stated it any better.

There is a huge schism between JBL/Infiniti et al and the specialty lines. Problem as I see it is that the non-specialty lines do not enjoy the reputation that, IMO, they should have, and causes people to either a: Ignore the good stuff or b: Simply not be aware of it.

This company has marketing problems right now, and hopefully this new ownership group will fix that. I really think they are underrated, but that this underrating is their fault. They allow themselves to be ignored.

j_garcia posts on April 26, 2007 15:41

I'm curious to see how it pans out as well, and whether it will mean changes to any of their products. Also curious if it is similar to what Denon and Marantz did forming a holding company that owns all of the associated brands.

nav posts on April 26, 2007 14:13

Crown (pro-audio) and Revel (higher end speakers) are two more Harman companies.

I wonder how Harman et al will be changed by this? For various reasons, I have the opinion that Harman is a progressive name in the audio fields but that their brands are poorly marketed. For instance, the general perception of Harman Kardon's increasingly poor quality control, whether true or not, is ultimately a marketing problem. In the consumer realm, JBL and Infinity are continuously drifting toward making the same class of products and relatively few know about Revel, leaving a gap in the middle of their consumer product range. I also do not think JBL's pro-audio equipment effectively brings its high-end connotation down to their consumer lines. A lot of potential without a grand plan it may seem.

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