Hello. We'd like to welcome you to Samsung Harman conference call. Later on, we will have a question and answer session. If you would like to ask a question at that time, simply press star, then number 1 on your telephone keypad. If at any point your question has been answered and you wish to remove yourself from the queue, simply press the pound key. I will now turn the call over to Mr. David Steel, Executive Vice President and Head of Global Communications for Samsung Electronics. Mr. Steel, please go ahead.
Thank you. Welcome to today's call about Samsung's acquisition of Harman International Industries. The call will be hosted by Samsung Electronics President and Chief Strategy Officer, Young Sohn, and Harman's Chairman, President, and CEO, Dinesh Paliwal. Let us start on slide two by noting that this conference call will include certain forward-looking statements as defined under U.S. security laws with respect to Samsung's agreement to acquire Harman. Any forward-looking statement speaks only as of the date on which such statement is made, and neither Samsung nor Harman undertakes any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. A full declaration regarding forward-looking statements and additional legal information are available at the beginning of the accompanying presentation and should be read in conjunction with this call.
We really appreciate that all of you could join the call on such short notice. With that, I'd like to turn it over to our President and Chief Strategy Officer, Young Sohn.
Good morning. Thank you for joining us. This is very exciting moment for us. Turning to slide three, let me start by sharing our vision for the future of connected cars. This is a key focus of Samsung's long-term strategy. The car of tomorrow will be transformed by smart technology and connectivity in the same way simple feature phones have become sophisticated smart devices over the past decade. Drivers are increasingly demanding a better in-car experience, as well as broader range of connected services. In response, OEMs are looking to accelerate the implementation of smart, integrated technology and services to meet that demand. We believe this market opportunity will be worth over $100 billion a year by 2025. We estimate the percentage of connected cars will more than double in the next 10 years to nearly 90%, and electronic content will increase from 29% to 38% of car's value.
The potential is clear, the challenge is how best to enter this market. We have been studying the automotive market for some time. We conclude that organic growth will not get us where we want to go fast enough. By acquiring Harman, which is a market leader, we'll immediately achieve critical mass. Together, we can help OEMs serve their customers even better. As part of Samsung, Harman can become a unique Tier one player, able to deliver end-to-end connected car solutions. Turning to slide four. I'm very pleased to be sitting alongside Dinesh today. We are excited to tell you why we believe this combination is an ideal fit that will enable us to drive real value for our customers, employees, and shareholders. Harman has a track record of innovation and superb reputation for excellence among its customers.
It also has a market-leading technology, iconic audio brands, and a world-class management team. The pairing of Samsung's mobile technology, semiconductors, and displays will enhance Harman's automotive and connected service businesses. Leveraging Harman's position as Tier one automotive player will create substantial growth opportunities and deliver benefits for customers. In addition to a big automotive opportunity, we are excited to combine our respective audio and video expertise. This will enable us to enhance offerings for both consumers and professional end markets. Long-term relationships are vital to success in the auto business. This is why we are so pleased that Dinesh and his management team will continue to work with us in this business. Harman will operate as a wholly owned subsidiary of Samsung. We expect no change in its headquarters, facilities, workforce, or brands. On slide five, let me say a few word about Samsung's long-term strategy.
We have been focused for some time on this attractive market. Last December, we set up an automotive electronics team to explore opportunities in the automotive technology space. We have made 15 venture investment in exciting, innovative startups. After assessing the market opportunity, we determined that the best way to accelerate our growth was by partnering with a leading Tier one player. Harman is a market leader and also like-minded partner. We both see exciting new opportunities in the car and the potential for seamless connected lifestyle across automotive, home, mobile, and work. This transaction will give us a strong position in a large and rapidly growing market. Together, we can provide full end-to-end solution for the auto OEMs and consumers. Our view is that partnering with OEMs is the best way to accelerate deployment of connected technologies. Samsung will not get into business of manufacturing cars.
With that, I'd like to turn it over to Dinesh to introduce you to Harman and share their exciting story. Dinesh?
Thank you, Young, and good morning, everyone. Before I discuss what Harman brings to the combination, which is shown on slide six, let me take a moment to discuss the value of this transaction to all of our constituencies. I would like to say how excited we are about this combination with Samsung, one of the most innovative and admired companies in the world. By joining forces with Samsung, we cement our outstanding track record of delivering compelling value to our shareholders. Value creation is deeply embedded in our culture, as evidenced by the results we have achieved. We cannot stand still. Based on the pace of change in the industry, we need to continue moving quickly to remain the industry leader.
With this transaction, we will deliver significant and immediate value to shareholders while positioning Harman to gain greater scale and resources and access to Samsung technology to remain the leader and grow our market share in the coming years. This transaction was carefully considered and unanimously approved by Harman's board of directors as the best way to maximize value for our shareholders. This transaction delivers significant and immediate value. At $112 per share in cash, we are delivering a premium of 28% based on Harman's closing price last Friday, and a 37% premium to Harman's 30-day volume-weighted average price. This represents a multiple of approximately 10 times over last 12 months EBITDA and actually 17 times P/E of LTM or even calendar year 2016. There is a very little overlap between our companies, and Samsung has a history of growing and nurturing iconic brands.
We expect a smooth path to completion and successful integration thereafter. Both Samsung and Harman believe this transaction is an ideal strategic fit that will maximize our complementary strengths. Samsung's global scale, R&D capabilities, and distribution channels will provide Harman the resources to broaden our technology portfolio, expand our reach, and accelerate the introduction of industry-first solutions. We are also excited about the benefits this transaction will deliver to employees, customers, and other stakeholders. For our talented employees, we expect being part of a larger, more diversified global company that would create many exciting opportunities. I would like to thank all Harman employees for making this transaction possible. Let me spend a few minutes on Harman and why I'm so excited about our future as part of Samsung. As you all know, Harman designs and engineer connected products and solutions for automakers, consumers, and enterprise worldwide.
This includes connected car systems, audio and visual products, enterprise automation solutions, and connected services. We have grown significantly and now have revenue of $7 billion and EBITDA of $866 million on an LTM basis. Our industry-leading automotive backlog was $24 billion as of June 30th, 2016. Backlog is an indicator of our success as well as a validation of customer confidence in our innovation pipeline. Turning to slide seven, you can get a good sense of how we are organized and the relative size of our primary business areas. As you can see, our business is built to deliver connected technologies for consumers, from their homes to their cars, to their offices, and everywhere in between. Harman has a core competency in designing sophisticated and highly integrated systems for cars.
Samsung has deep knowledge of electronic components, including processors, memory chips, displays, as well as telecommunications, 5G connectivity, and IT system integration. We are also excited about how all of this can be leveraged with our customers. In addition, our lifestyle audio business is a leading provider of technology and premium branded sound solutions. Our professional solutions division serves the entertainment and enterprise markets. With this transaction, we will be a comprehensive system provider offering a complete audio signal chain along with Samsung's unmatched display capabilities. Finally, on the connected services front, our newest division, we are focused on software and services. We see incredible opportunities in IoT for the automotive, consumer, and professional markets. Supporting Harman's industry-leading solutions is our globally diverse workforce of incredible talent, more than 30,000 professionals around the world. We are fortunate to have such a deep bench of talent across our organization.
Samsung recognizes this strength and will operate our company as a standalone subsidiary following the close of the transaction. I will continue to lead, and I'm very proud and pleased that I'll be continuing to lead Harman along with our existing leadership team and workforce as we also continue to take bold steps and decisive actions to win in the marketplace and work very closely with colleagues in Samsung. With that, let me again say how excited the entire Harman team is to become part of this great Samsung organization. I look forward to working closely with Samsung to achieve a seamless integration. Looking ahead, the Harman team will continue to combine passion and purpose to deliver smart products, systems, software, and services that connect people wherever they are. We are really looking forward to working together, and I know we'll be even more successful together.
I will now turn the call back to Young.
Thank you, Dinesh. As you can see on slide eight, Samsung is a leader in connected devices, core technology, and innovation, and Harman is a leader in branded audio technology and has deep relationships in the automobile industry. As the largest maker for consumer electronics, mobile, and core technologies such as display and semiconductors, we bring powerful assets that can drive convergence of consumer and auto technologies and services. Together, we can grow bigger and faster than either of us could have done on our own. The auto industry has long lead times, and Harman's revenue lock is $24 billion, which gives excellent visibility into their performance. Let me give you some more specifics on growth opportunities in slide nine.
Our vision of the connected car of the future includes a seamless user experience with multiple display screens, enhanced entertainment systems, high-speed 5G connectivity, and artificial intelligence that one day will lead to driverless cars. Through the combination of Samsung and Harman, we'll be positioned to address the four major trends that are transforming the auto industry, autonomous, connected, electric, and user experience. While automotive electronics and the connected car are major drivers for our partnership, there are real opportunities in the home, offices, major public venues, and personal devices. Importantly, we'll be able to leverage our display and core technologies to enhance Harman's audio businesses. Both companies can also leverage their combined strong consumer and professional channels. We believe there are significant opportunities here. Let me tell you about summary of transactions in slide 10. As Dinesh described, this is a compelling opportunity for both shareholders.
This transaction brings significant growth opportunities for us and immediately accrues to our earnings. We expect the transaction to close in mid-2017. Both Samsung and Harman are confident that we will obtain all necessary regulatory approvals in a timely manner. On slide 11, let me show you the strong support this transaction is already receiving from leading automotive executives. Both Rick Hudi, formerly of Audi, and Steve Girsky, formerly of GM, believe making Harman part of Samsung will create a new kind of tier-one player. Their comments are on this slide. In summary, we are very excited about this transaction and look forward to working together with Dinesh and the entire Harman team in the years ahead. As we have discussed, this transaction is about growth. With Harman, we have found the perfect partner to establish a significant presence in a rapidly transforming market.
With that, Dinesh and I will now take questions. Operator, please open the lines for questions.
Thank you. Once again, ladies and gentlemen, if you wish to ask a question, simply press star one. In the interest of time, we do ask that you please limit yourself to one question and return to the question queue if you have a follow-up. We will answer follow-up questions as time permits. Again, please limit yourself to one question. Our first question comes from the line of Dohoon Lee of CIMB Securities.
Hi. Congratulations on the deal. I'm sure that both Samsung and Harman should have very exciting opportunities ahead. My question is about synergies for Samsung Electronics existing business from the deal. Not just regarding your consumer electronics like mobile and TV, but also more specifically in terms of the impact on Samsung's component businesses. Can we expect this deal to expedite Samsung's validation process to get into a global auto OEM vendor list? In other words, when can we expect auto application can be more noticeable and meaningful within Samsung's component business revenue and earnings?
Great question. I think that one of the reasons why we made this announcement is that automotive industry has a different life cycle than consumer electronic products. Having a tremendous relationship that Harman has built over time will help us to learn, help us to build a relationship, help us create design wins that will help our component business, as well as really core technologies that are required. I mentioned about major trends around autonomous, connected, electric car, user experience. This is all new area that are happening in front of us, only when you work together with someone of like Harman, that understands industry. With the core technologies that we invest in, we believe we can create better solutions. As you know, the life cycle of this business is not a short term. It typically takes several years designing products.
My expectation is that somewhere in few years out, you will see exciting design wins based on our technology that can change the experience for consumer base.
Thank you.
Our next question comes from the line of Peter Yu of C&T.
Yes, hi. Thanks for getting my question. Looks like this acquisition is Samsung's efforts to get into this automotive technology market and maybe use Harman as a springboard to get into the other parts of the auto parts business. When you look at it, what will be the range of business scope on top of the Harman business that Harman used to do? Will you be getting into this kind of a sensors or computing boards for the autonomous driving car? You mentioned electrification of cars. Does that mean that you will get into the powertrains and all the ancillaries as well? I just want to get your long-term strategy in these automotive businesses.
Great. Good question. I just want to make sure we are clear. We did not make this announcement to get into more traditional businesses. We are really excited about where the car of a future is going, I made a comment about how you used to have feature phones that you can get the calls from and you can send the calls, but today's smartphone is a part of you. It has a presence, it has all your data, it is information in your fingertips. I think that tomorrow's car will have similar kind of opportunities, where your information will be seamlessly connected, your experience will be much different. I think that as an IT company, we are very excited where this new direction is. I don't think we would be interested in traditional powertrains or body parts or car seats and things like that.
This is all about new user experience, where technology and connectivity matters.
I see. Thank you.
Our next question comes from the line of David Lim of Wells Fargo Securities.
Hi, can you hear me?
Yep. Thank you.
Congratulations, and also in Korean, [Foreign language]. The question that I wanted to ask is, what is Samsung's vision in autonomous, and how will you leverage artificial intelligence in Harman's, well, I guess now it's Samsung, Ready Vision technology for the autonomous vehicle as well as active safety? Thank you.
I want to have Dinesh talk about his technology, but I'll just add a comment about your comments around the importance of AI, importance of connectivity, and also just importance of autonomous direction, this direction is going. I don't know when autonomous car will be on the road, but we know there are many degree of autonomous, semi-autonomous, safety. These are all very critical items. Having a right sensors, having the right algorithm that can be able to fuse different information that are coming from sensors, and then having a connectivity that can enable have that information connect to the cloud, and then being able to analyze them and to provide the better insight. These are all very critical parts of enablement that actually Harman already have many parts of that they bring.
What I like to do is, that's the goal where we're going, but I'm going to have Dinesh articulate some of the investments, some of the work they've been doing. Dinesh?
I think it's a great question, and actually it speaks for this integration of Samsung, Harman into Samsung. If you think about what we have been doing and winning pretty decisively with such large backlog of pipeline, we are industry leader in compute platform, in telematics, and application development on top of that. We have done that very well across German industry, American, Asian industry. On top of that, we have been building world-class telematics with gateway approach. Recently, industry first award was won in Germany, and we have been investing heavily in over-the-air update technology, cybersecurity. In fact, NHTSA, just recently as we announced in our earnings call, announced among all the cybersecurity technologies worldwide, Harman was ranked number one, world-class.
If you think about L2, L3, you need compute platform, you need sensor fusion, you need distributed intelligence instead of 80, 90 ECUs, maybe 20 to 25 powerful ECUs. Samsung's competence will absolutely will be at play with processors, with memory. Then you talk about massive display technology. You will need lot of displays, you need contextual user interface. Again, that's Samsung's competence. If you see, this is highly complementary. There's hardly any overlap. What we do, what they bring to the game. In addition, Young has mentioned, investing in 15 startups for ADAS and sensor fusion. Now you have it. Now you have the smarts and the automated parts of the car, which is where we want to focus. I like the analogy, we don't want to follow the puck, we want to be where the puck's going to be.
That's where we want to be, as a big, strong tier 1 of smarts.
Great. Thank you.
You're welcome.
Our next question comes from the line of Daniel Kim from Macquarie.
Thanks for taking my question. This is Daniel Kim, Macquarie, Korea. Harman has been on quite a roll, having just delivered another strong quarter result. I'm wondering, are you concerned whether your shareholders will view this price as appropriate or inadequate? Thank you.
Well, this transaction delivers a compelling and immediate value for Harman shareholders. $112 per share in cash, that represents 28% on the last Friday's closing, and 37% premium to 30-day volume average price. As I said earlier in my comments, that represents 17 times P/E multiple of this last 12 months, also for this calendar year. We feel very good about it, and it's instant value creation as it is an all-cash transaction. It's a great thing. Also, when we go one step beyond our shareholders, our employees are also shareholders. For that 30,000 people, it's a synergy all across the world with Samsung technology and people. I feel from shareholders' point of view, our board of directors have always encouraged management team to maximize the value, and we have delivered, including, as you said, first quarter.
The value Samsung's transaction represents is a very healthy margin.
Great. Thank you.
Our next question comes from the line of Marcus Shin of Goldman Sachs.
Hi, thank you for taking my question. This is Marcus Shin from Goldman Sachs. As you mentioned, Samsung will likely pay around 37% premium to Harman's 30-day volume weighted average price, which could potentially raise concern on overpricing issue from some investors from Samsung perspective, especially taking into account the fact that global auto part companies are currently trading at around five to six times EV/EBITDA range for the next 12 months. Can you potentially walk me through how you come up with your pricing, if possible?
Let me start, then I'm sure my colleague, Young, would have something to say. When you say auto parts, there's a whole spectrum. We take great pride in saying we are unique. Our offerings are highly software algorithm-driven, cloud-based analytics, data analytics. I know there's an importance for all kind of real estate in the car, whether it is seats and HVAC and powertrain, lot of metal, lot of other things. We are high-value-end provider, and that's the reason why we have such rich order backlog. In fact, we are the highest quartile profit margin company. For that, our multiples are, we think, are in a very good in line with the Harman shareholders' expectation, and we are pleased with the outcome.
Yeah, I would add, echo that. I think that parts maker is a very general way of looking at the industry. I look at Harman as a system company. System company with software, system company with architecture, system company with a large number of software teams that enable the kind of service that Dinesh mentioned. I am really happy that we actually have the deal where we can be able to meet their requirements, but yet being able to execute where we can be able to create this transaction.
Okay. That's very helpful. Thank you.
Thank you.
Our next question comes from the line of Brian Johnson of Barclays.
Good morning, and good evening.
Good morning, Brian.
Depending where you are. Yeah, just want to understand, sort of thinking long-term strategy. Well, one quick housekeeping point, which is, will this require a vote of Samsung shareholders? How do you think this changes the competition for infotainment and electronic content in the car? If we kind of think of a car circa 2020, 2021, what are the type of solutions that you think the two of you together can deliver? What do you think that means for the more automotive siloed tier 1 competitors?
Okay, let me answer the comments around the first question, and then maybe Dinesh can also add a comment around the future of car as well. For the Samsung decision-making, our board of directors unanimously approved this deal last night. I'm very pleased to communicate that decision to you, and it does not require vote of shareholders.
Brian, let me tell you, that's a very passionate topic for me. You've heard me talk about, look, this industry has been on a fast-paced transformation. 10 years ago, there are 250,000 lines of code, and now we are shipping 30 million lines of code, lot more than the Dreamliner airplane. We're not stopping here. The industry is pushing the envelope, which means a transformation of whole electronic architecture, the instrument cluster, which is where Samsung brings in strong competence, the displays, the artificial intelligence, the sensor fusion. That's where the content is going, as you heard from Young, from low 30s to high 30s, or actually high 20s to low 30s content per car. So nearly one-third of the car value will come from software and electronics and contents like between Samsung and Harman, we will have. That's very exciting, the pie is expanding.
I think from where I see industry is and where we stand together, this is a big move. This will shake the industry. This is a massive scale gain for Harman, highly complementary, and this will put pressure on the way industry is organized right now for the traditional tier 1s to stay afloat and to compete and to be able to supply L2 and L3 type of car architecture. Either they have to invest heavily, which is a long-term, organically, or they have to partner with someone. Brian, you have also heard me say, for last 2 years I've been saying Harman is fantastic, very successful, but to be able to play big in L2, L3, and L4, we need to partner.
We have mentioned we have already strong partner with Google, Apple, Microsoft. This is a dream come true because it's so complementary, and we'll be able to create proof of concept for the next design-ins to show them that what is possible. I think that's where we are. Cars in 2020 would have some of the, hopefully, some design wins, which will be jointly done by Samsung Harman architecture.
Thank you.
You're welcome.
Our next question comes from one of Peter Ling of NH Investment & Securities.
Thank you for taking my question. This is Peter Ling from NH. Samsung and Harman combination looks good. Could you explain why this acquisition is good for Harman employees and Harman customers? Thank you.
Well, that's a great one because that was one of the most exciting element when we learned from Young and Samsung team that they really expressed tremendous respect and value for our technology, our brands, and our employees and the management. As Young said, I'm so proud actually to say, I will continue in my role, and my entire management team is delighted to be part of going forward because some of the exciting things will happen together. All our employees are also being assured that this transaction is not about cost cuttings as many transactions bring. This one is about positive synergies from Samsung rich scale of R&D, innovation. In fact, those are the things will accelerate what Harman has been trying to do. I see a lot of synergy here.
For a Harman employee, as I said, Samsung is a great global, highly diversified company. It actually offers lot many more personal and professional growth opportunities for Harman employees, unlike in Harman. All in all, it's a slam dunk.
I'm going to just add a comment why I think that this could be really exciting opportunity for Samsung and Harman together. This is a lot to do with the fact, as you know, Samsung has been investing very heavily in the area of mobility, connectivity, semiconductors, and display, but we have not been playing in the auto market. By working together, we have an opportunity to please our customers and being able to make our expansion of technology base to enable our customers, our employees interact even bigger way than we can do it alone.
I'm glad, Young, you mentioned that very powerfully statement. I will also add to that, customers. That's why we are here together. This integration, this acquisition is all about our customers and our shareholders. We need to create value for our shareholders, and we need to show value to our customers. If you look at our customers, Samsung is not new to automotive industry. They have been the largest supplier of memory and lot of other electronic components, and Harman is very well-known. I think our customers do expect greater integration of sensor, software, algorithms, end-to-end service delivery, data analytics capability, cloud-based applications. These are not the competencies car industry has, and that's why the Bay Area companies have expressed interest.
Sometimes they underestimate the complexity of the industry, and they end up saying, "We're going to get into car making." Unlike that, Samsung has made a bold statement, we're not getting into car making, yet we're going to supply the very high-end electronics and system architecture and design and end-to-end software analytics. I think it's something what car industry has been asking for.
Okay. Thank you.
Our next question goes to the line of Adam Jonas of Morgan Stanley.
Hi, Dinesh and team. Congratulations.
Hi, Adam. Good morning. Thank you.
You got it. Just a simple question. Was this a competitive process for you as you were exploring strategic opportunities? If you're able to give any color around that would be helpful for Harman shareholders. Thank you.
Adam, I always thought that one is very simple. We are in the industry, I say we are in the know. We are tightly working with the think tanks of German, Asian, and American car industry, We partner with pretty much everybody. Google is a big partner. Apple is a partner. We work with Microsoft, bringing their productivity suite in the car first time, Of course, all the silicon manufacturers. We have worked with Samsung too. When we looked at what would make the best combination, this was a great choice for Samsung to look at Harman and for us to look at Samsung. That prompted, this was a very fast process. This discussion started summer, here we are.
Thank you.
Our next question comes from the line of Joseph Spak of RBC Capital Markets.
Thanks and congrats, everyone. I think, in the world of technology, the idea of co-opetition and frenemies, as Dinesh has put it in prior calls, is a little bit more commonplace. As we enter this new world in automotive where there are clear ambitions from other players, I was wondering if you could just give a view as to how you're thinking about this web, which seems like it could get increasingly tangled. Thanks.
It is, and I think it's a good thing for auto industry, because I continue to believe, I don't know there is any single tier one who has the total solution, unless they get out of their comfort zone and say, "We're going to either collaborate or get into the scale." That's what just happened here. That's what excites me, because come on, we have to put customer first, and I think we're going to bring a lot more. Again, we are not saying we have all the solutions of tomorrow, but we are not stopping here. Like in Harman's case, over the last seven years, Joe, you've seen we've made quite a few bolt-on technology acquisitions from Red Bend for OTA, for TowerSec for cybersecurity, iOnRoad for ADAS solutions, Symphony Teleca for data analytics and cloud-based applications. Samsung has.
They have been very strategically making investments in startups and also in artificial intelligence companies, speech company. I think if you see the DNA of these two companies, very similar, very innovative, very fast track, and this collaboration will actually expedite more collaboration, more co-opetition, more frenemies. We will compete, and they are our friends and our enemies sometimes. They compete, they cooperate. I'm going to have Young to comment on that because he comes from this industry.
Well, I think that the reality is that no one company can provide full spectrum of solution for your customer need. We must work with our partners, sometimes competitors, to create a platform that can be able to accelerate deployment of technologies. I think it's just normal, especially at Samsung, where we have whole bunch of relationship from components to subsystems and system level. I think that you will see our approach always has been, what is good for customers, how we can accelerate technology, and being able to drive that as a way to bring solutions to customers rather than trying to close the architecture, close the platforms. Open platform is really our mantra.
Thank you, ladies and gentlemen. We have time for one last question. Our final question will come from the line of Matt Stover of SIG.
Thank you very much. Can you hear me?
Hey, Matt. How are you?
I'm very well. This is from the perspective of Samsung. I'm wondering, when you looked at the spectrum of electronic and engineering capability within the Harman platform, what it is that was most appealing to you in terms of product area where you saw an opportunity in the market and you saw a need that was satisfied by the Harman portfolio? Thank you very much.
Thank you. I think that's a really good question. Obviously, when we look at the companies, there are many things that we liked, the history of innovation, and we spent a lot of time on automotive. I would actually start with the iconic technology innovation that started in audio area for 70 years. It's a company that has built on a technology that are highly complementary with our video technologies. Combination of video and audio, we think we can build a very good business there as well.
In automotive in particular, it's going through a major changes. I mentioned about the comparison of feature phone, smartphone. I think a lot of technologies that we've been working together, as we are looking at it, Harman has a capability to integrate it, capability to work with customers, capability to create a platform that can integrate the compute platform system with integration of different software and the cloud solutions. I think that Harman has been investing in this area for several years, and we've been evolving, and we like what we see in terms of the number one connected car technology company, cloud capabilities, telematics capabilities, over-the-air update, and very proven secure security features. These are very critical things that will help us build a platform that can move us much faster into this market than doing it alone.
Thank you.
That was our final question. I'll now turn the floor back over to management for any additional or closing remarks.
Well, I really thank you, all of you, joining us. I hope you have a better understanding of this important announcement that we made. We are very excited about this transaction, we look forward to hearing from you more.
Very quickly, my last remark is for Harman shareholders. My management team and I feel very proud for all these years of value creation, this transaction really shows what this company's worth, the 37% weighted average for 30 days 28% on last Friday's closing price, 17 times P/E multiple. We're very happy it's all-cash transaction, it's a good value for our shareholders, our board of directors unanimously approved that.
Ladies and gentlemen, thank you for participating in today's call. This concludes the program. You all may now disconnect.