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Lee’s arrest puts Samsung’s Harman deal in question

Feb. 17, 2017 - 16:07 By Korea Herald
Uncertainties spiked Friday over Samsung Electronics’ plan to take over Harman International, as its chief was arrested one day ahead of the US firm’s shareholders meeting.

According to the financial industry, the physical detention of Samsung Electronics Vice Chairman Lee Jae-yong may affect a meeting of shareholders of Harman International, scheduled to be held in Stamford, Connecticut at 9 a.m. on Friday, local time.

“Previously, it was highly expected that the shareholders meeting wouldn’t impact the success of the deal, but such unexpected news could possibly affect some Harman shareholders,” said an analyst at a Korean securities brokerage who declined to be named.

Harman’s shareholders were going to vote on the US audio giant’s planned integration with Samsung Electronics at the meeting.

Samsung announced an $8 billion deal to take over Harman last November for its new growth engine. Under the deal, the Korean tech giant will buy Harman at $112 per share, paying a 37 percent premium on the stock’s 30-day average closing price.

Known as “Lee Jae-yong’s mega deal,” it was the largest investment plan of Samsung since its heir apparent took the helm. The deal represented Samsung’s ambition in the automotive electronics business.

However, in early January, some minority shareholders of Harman filed a class-action suit with the Delaware Chancery Court against Harman’s chief executive officer, in opposition to the deal. Those shareholders claimed that Samsung’s acquisition price is too low considering Harman’s stock performance last year, which posted $145 per share.

“Harman’s shareholders could become increasingly uncertain about Samsung’s takeover of the firm (in light of Lee’s arrest),” said Park Ju-gun, the president of CEO Score.

The mega deal needs approval from 50 percent or more of the shareholders.

“We aren’t yet paying keen attention to the meeting, leaving it up to Harman’s board,” said a spokeswoman at Samsung Electronics.

By Song Su-hyun (song@heraldcorp.com)