ZD Net and South Korean media report that shareholders of US technology and pro-
AV giant HARMAN have last week filed a class action suit against the firm’s CEO and
board, opposing its proposed $8 billion merger with Samsung Electronics.
Shareholders have filed the lawsuit against HARMAN CEO Dinesh Paliwal and the
board in a court in Delaware, alleging that they did not act in good faith in striking
the deal with the Korean tech giant.
The shareholders said the HARMAN board set the value of the company too low and
agreed to a price that did not realise appropriate shareholder value, thereby
causing shareholder damages. In addition, it is argued, there is a fundamental flaw
in the deal, in HARMAN’s agreement to not look for competing bidders, which
shareholders have also opposed.
Earlier in December, US hedge fund Atlantic Investment Management, which owns a
2.3 percent stake in HARMAN, said it would vote against the deal as the buying
was too low.
Samsung announced the acquisition of the company for $8 billion, the biggest in its
history, in November 2016.
The deal will allow the South Korean tech giant to become a tier-1 component
supplier in the automobile market, which represents HARMAN’s largest revenue
stream. HARMAN supplies the auto market with software and components
in-car entertainment and safety systems, among others. The deal will see Samsung
able to its displays and semiconductors together, for connected cars. Neither
company has yet commented on the future plans for HARMAN’s stable of high-end
pro-AV brands, including JBL and Crown.
Samsung agreed on $112 per share, 28 percent higher than the price on November
13, and 37 percent higher than the average the month before.
The deal will go through if over 50 percent of HARMAN’s shareholders agree in the
shareholder’s meeting, expected in the first quarter this year.