Harman International Industries Inc.
Harman International Industries — Merger or Acquisition (January 2017)
19 slides from Harman International Industries's merger presentation, Jan 30, 2017
Slide 1: HARMAN's Sale to Samsung: Maximizing Shareholder Value
HARMAN’S SALE TO SAMSUNG: MAXIMIZING SHAREHOLDER VALUE January 30, 2017 HARMAN International. Confidential. Subject to Confidentiality Agreement. Copyright 2017. HARMAN
Slide 2: Important Information
HARMAN IMPORTANT INFORMATION Additional Information and Where to Find It In connection with the proposed transaction, HARMAN International Industries, Incorporated (the “Company”) filed with the Securities and Exchange Commission (the “SEC”) a definitive proxy statement on January 20, 2017 and maile
Slide 3: Agenda
AGENDA 1. Executive summary 2. Perspectives on automotive sector trends 3. Key takeaways HARMAN International. Confidential. Subject to Confidentiality Agreement. Copyright 2017. 3 HARMAN
Slide 4: Transaction Delivers Superior Value for HARMAN's Shareholders
TRANSACTION DELIVERS SUPERIOR VALUE FOR HARMAN’S SHAREHOLDERS • All cash consideration at a significant, immediate and certain premium • Implied transaction valuation is superior relative to historical average and peer trading multiples, and precedent transactions • Provides more compelling value to
Slide 5: Compelling Transaction Terms
COMPELLING TRANSACTION TERMS ? Total consideration of $112 per share in cash, or a total equity value of ~$8bn ? No financing condition. Samsung to fund the transaction with cash on hand Transaction ? Delivers significant and immediate value to HARMAN shareholders ? 37% premium to 30-day VWAP terms
Slide 6: HARMAN's Sale Process Was Conducted to Maximize Value for Shareholders
HARMAN’S SALE PROCESS WAS CONDUCTED TO MAXIMIZE VALUE FOR SHAREHOLDERS • HARMAN’s Board, comprised of all independent directors (other than the CEO), led the sale process • The Board and its advisors have periodically reviewed potential strategic transactions during the past few years, including dis
Slide 7: The Transaction Creates Significant, Immediate and Certain Value
THE TRANSACTION CREATES SIGNIFICANT, IMMEDIATE AND CERTAIN VALUE OFFER PREMIUM (%)1 69.1% 40.1% 37.3% 37.9% 34.1% 27.8% 28.4% 7.5% Pre-announcement 2 10-day VWAP 30-day VWAP 180-day VWAP 52-week VWAP 52-week high 52-week low Precedent transactions 3 Reference $87.65 $83.49 $81.60 $79.92 $81.22 $104.
Slide 8: Implied Transaction Multiple Is Greater Than Company and Peer Historical Levels
IMPLIED TRANSACTION MULTIPLE IS GREATER THAN COMPANY AND PEER HISTORICAL LEVELS… • Research analysts and investors value HARMAN versus automotive suppliers as peers AVERAGE TRADING MULTIPLES (PRE-TRANSACTION ANNOUNCEMENT) AT ANNOUNCEMENT 1-YEAR 2-YEAR 5-YEAR 10-YEAR 6.2x 9.4x 6.4x 9.4x 7.5x 9.4x 6.9
Slide 9: And Higher Than Precedent Transactions
AND HIGHER THAN PREDECENT TRANSACTIONS • Using publicly available information, HARMAN’s financial advisors reviewed select transactions involving acquired businesses and assets that may be considered similar to HARMAN • The financial advisors selected18 precedent transactions since 2010 and calculat
Slide 10: Wall Street Supports the Transaction
WALL STREET SUPPORTS THE TRANSACTION “Valuation at 10x EBITDA is a substantial restating of the group – an “Samsung’s takeout offer values HAR at around 15x our FY17 EPS estimate, excellent deal for HAR shareholders, in our opinion. Management which is roughly in-line with other technology-oriented
Slide 11: Agenda
AGENDA 1. Executive summary 2. Perspectives on automotive sector trends 3. Key takeaways HARMAN International. Confidential. Subject to Confidentiality Agreement. Copyright 2017. 11 HARMAN
Slide 12: Perspectives on the Automotive Industry and Implications for HARMAN
PERSPECTIVES ON THE AUTOMOTIVE INDUSTRY AND IMPLICATIONS FOR HARMAN • U.S. Automotive sector has expanded for 8 straight years and most industry forecasts predict sales plateauing over the near to medium term1 • Automotive industry is rapidly evolving, with increasing technology content in each vehi
Slide 13: U.S. Light Vehicle Sales
U.S. LIGHT VEHICLE SALES US AUTO SALES HAVE GROWN FOR 8 STRAIGHT YEARS TO HISTORICAL HIGHS AND ARE EXPECTED TO PLATEAU Sales (mm) YoY Change 20 60% 50% 18 40% 16 30% 20% 14 10% 12 0% 10 (10%) (20%) 8 (30%) 60% 50% 40% 30% 20% 10% 0% (10%) (20%) (30%) (40%) 20 18 16 14 12 10 8 6 1967 1968 1969 1970 1
Slide 14: Continued, Rapid Evolution of Auto Sector Towards a More Complex, Connected Vehicle
CONTINUED, RAPID EVOLUTION OF AUTO SECTOR TOWARDS A MORE COMPLEX, CONNECTED VEHICLE CONNECTIVITY SAFETY BIG DATA ELECTRIFICATION PERSONAL MOBILITY ? Demand for IoT ? Integrated safety ? Cloud ? Efficiency ? Sharing economy ? High speed data ? Regulation ? Security ? Environmental ? Urbanization ? In
Slide 15: Automotive Value Chain Is Re-Positioning in Response to Technology Evolution
AUTOMOTIVE VALUE CHAIN IS RE-POSITIONING IN RESPONSE TO TECHNOLOGY EVOLUTION Traditional automotive companies New entrants / “disruptors” OEMS OEMS & SUPPLIERS SUPPLIERS TECH CHIPMAKERS HARMAN International. Confidential. Subject to Confidentiality Agreement. Copyright 2017. 15 HARMAN
Slide 16: Acceleration of Strategic Auto Tech Activity and Competition in 2016
ACCELERATION OF STRATEGIC AUTO TECH ACTIVITY AND COMPETITION IN 2016 Automotive OEMs Automotive suppliers Joined forces with Intel and Mobileye to bring fully autonomous driving to streets by 2021 Unveiled its first self-driving test vehicle in Japan Collaborating with IBM Watson on in-vehicle artif
Slide 17: Wall Street Views on the Automotive Technology Space
WALL STREET VIEWS ON THE AUTOMOTIVE TECHNOLOGY SPACE “The IT industry – led by Apple and Google, has been leading the expansion of smartphone OS platform in vehicles. Mirroring has strengthened Android Auto’s and Car Play’s connectivity between mobile devices and automotive electronic parts, while a
Slide 18: Agenda
AGENDA 1. Executive summary 2. Perspectives on automotive sector trends 3. Key takeaways HARMAN International. Confidential. Subject to Confidentiality Agreement. Copyright 2017. 18 HARMAN
Slide 19: Key Takeaways
KEY TAKEAWAYS • HARMAN’s sale process was conducted to maximize value for shareholders o The process was informed by discussions with potential transaction partners over the course of several years and consideration of other potential alternatives leading up to the decision to enter into the agreeme
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