Harman Sells Digital Solutions Division for $375 Million

On August 21, Samsung Electronics’ U.S.-based automotive electronics and audio subsidiary, Harman International (hereinafter referred to as “Harman”), announced that it has agreed to sell its Digital Transformation Solutions (DTS) division to Indian IT services giant Wipro for $375 million. This move aims to streamline operations and allow greater focus on core business development.

Image source: Harman

According to the agreement, Wipro will take over Harman’s Digital Transformation Solutions division’s 18 offices worldwide (including the United States, Europe, and Asia), and will also absorb approximately 5,600 existing employees from the division. Both Wipro and Harman stated that the transaction is expected to be completed within this year.

As part of this acquisition, Wipro will enter into a multi-year strategic agreement with Harman and Samsung Electronics to further deepen their partnership and open new avenues for joint growth and transformation. Upon completion of the acquisition, Harman's Digital Transformation Solutions division will be integrated into Wipro's Global Engineering business line.

In this transaction, Deutsche Bank Securities served as the financial advisor to Harman.

Harman explained that this asset divestiture will enable it to exit non-core business areas and instead focus resources on strengthening its flagship businesses—automotive electronics and high-end audio—while also exploring new growth drivers.

In March 2017, Samsung Electronics acquired Harman for $8 billion, setting a record at the time for the largest overseas acquisition by a Korean company. Although there were doubts initially about the acquisition—Harman's operating profit in its first fiscal year under Samsung Electronics was only 60 billion Korean won (approximately $42.9 million)—Harman has now become a key profit engine for Samsung Electronics. Just last year, Harman's operating profit reached 1.3 trillion Korean won.

Prior to this sale, Harman had demonstrated its ambition to expand its ecosystem through a series of acquisitions. In June of this year, Harman announced the acquisition of assets from Cipia, a global leader in driver and occupant monitoring systems for the automotive industry. In May, Harman acquired the consumer audio division of U.S. medical technology company Masimo for $350 million. Last November, Harman also acquired Roon, a music management, search, and streaming platform, to enhance its software and services product portfolio.