Back in November, we heard that Samsung had agreed to buy Harman in a deal which was worth $8 billion. This acquisition was seen as a strategic move by Samsung to expand its presence in the automotive and connected technologies market. However, it now looks like the deal may be blocked due to opposition from some Harman shareholders.
Shareholder Opposition and Lawsuit
Some Harman shareholders have decided to oppose the acquisition on the basis that the company is undervalued in the deal. They believe that the $8 billion offer does not reflect the true value of Harman, considering its strong market position and future growth potential in the automotive sector. These shareholders argue that the board of directors did not adequately explore other potential buyers who might have offered a higher price.
The shareholders have filed a lawsuit in the Delaware Chancery Court against Harman’s CEO Dinesh Paliwal and also the company’s board of directors. The lawsuit alleges that the board breached its fiduciary duties by agreeing to the Samsung deal without properly considering other offers. The plaintiffs are seeking to block the acquisition and force the company to seek alternative bids that could potentially offer better value for Harman’s shareholders.
Concerns Over the Acquisition Terms
The shareholders are objecting to the terms and conditions of the acquisition. They argue that the deal includes provisions that unfairly benefit the company’s executives at the expense of ordinary shareholders. For example, the lawsuit claims that certain executives stand to receive substantial financial benefits if the deal goes through, creating a conflict of interest that may have influenced their decision to support the acquisition.
Additionally, the shareholders are concerned that the company did not consider selling to other companies. They believe that a competitive bidding process could have resulted in a higher purchase price, benefiting all shareholders. The lawsuit seeks to compel Harman’s board to conduct a thorough review of all potential buyers and negotiate the best possible deal for the company’s shareholders.
Harman is expected to hold a shareholders meeting sometime in the first quarter of 2017 to vote on the acquisition. This meeting will be a critical moment for the future of the deal, as shareholders will have the opportunity to voice their opinions and cast their votes. If a significant number of shareholders oppose the acquisition, it could be blocked, forcing Harman to explore other options.
The outcome of this lawsuit and the shareholders’ meeting will have significant implications for both Harman and Samsung. For Harman, the decision will determine whether the company remains independent or becomes part of Samsung’s growing portfolio of connected technology assets. For Samsung, the acquisition represents a strategic move to strengthen its position in the automotive market, which is becoming increasingly important as cars become more connected and autonomous.
The opposition from Harman shareholders highlights the complexities and challenges involved in large corporate acquisitions. While Samsung’s $8 billion offer may seem attractive, the shareholders’ concerns about undervaluation and the board’s decision-making process underscore the importance of thorough due diligence and fair negotiation in such deals. The upcoming shareholders’ meeting and the outcome of the lawsuit will be crucial in determining the future of the Harman-Samsung acquisition.
Source Mobile Syrup
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