By Lee Min-hyung
Samsung Electronics is speeding up its portfolio reshuffle through aggressive merger and acquisitions (M&A), as part of its bid to gain new momentum following its setback over the recall of its Galaxy Note 7 smartphone.
The firm’s latest M&A announcement came Wednesday when it acquired Canada-based mobile messaging service firm NewNet. The move came as Samsung hopes to expand its presence in the rich communication services (RCS), which is identified as next-generation messaging technology enabling users to share not just photos or videos, but locations with others. Samsung did not unveil the exact value of the deal, citing the terms of the contract.
The world’s largest smartphone manufacturer said it hopes to accelerate the adoption of RCS mobile devices, taking a leading role in establishing an ecosystem for the next messaging technology by teaming up with mobile carriers here and abroad.
This came only two days after Samsung announced its $8 billion (9.32 trillion won) acquisition of U.S.-based auto-parts supplier Harman. The transaction, the largest-ever by Samsung, has made headlines across the globe, as autonomous and smart vehicles have recently been identified as the next key growth area by global information and communication technology (ICT) firms and automakers.
Market experts said the aggressive expansion through M&A bodes well for the firm’s outlook, offsetting the whopping acquisition costs.
“The acquisition might accelerate Samsung Electronics’ business diversification into automotive technology, given Harman’s strong presence in the growing connected car segment,” S&P said in a statement.
“This might enhance the firm’s competitiveness in existing businesses such as home appliances and smartphones, given Harman’s premium brand in audio and strength in connected technology,” it added.
Following the Note 7 crisis in early September, Samsung has acquired three overseas ICT firms ― including U.S.-based artificial intelligence platform developer Viv Labs, Harman and NewNet.
Following the Harman deal announcement Monday, some critics have raised concerns over Samsung’s massive spending, as the Seoul-based firm offered to pay $112 a share for Harman, or a 28 percent premium over the latter’s closing price last week.
But a local analyst dispelled the concern, putting investments over short-term profitability.
“Some may point out that Samsung purchased Harman at a rather higher price, but Samsung may have found a shortcut into the auto-parts industry through the acquisition at a critical time when the firm needs to secure new growth engines,” Dongbu Securities analyst Kwon Sung-ryul said.