Moody’s: Samsung unaffected by $8 billion acquisition

Moody's Investors Service said that Samsung Electronics Co., Ltd.'s acquisition of Harman International Industries, Inc. will have no effect on Samsung's A1 senior unsecured rating and stable outlook.

The company announced on Nov. 14 that it entered into an agreement to acquire 100% of Harman for about $8 billion in cash, Moody’s explained.

The transaction is expected to close in mid-2017 and is subject to Harman shareholder approval, anti-trust reviews by regulatory authorities and review by the Committee on Foreign Investment in the United States, the agency said.

Although at $8 billion, the transaction is large in absolute terms and the largest cross-border transaction ever undertaken by a Korean company, its scale is small relative to Samsung's very large operating scale and liquidity holdings of $71 billion at the end of the third quarter of 2016, Moody’s said.

The acquisition should allow Samsung to diversify into and gain a solid presence in the connected car solutions industry, which has good growth prospects, the agency said.

Pro forma for the acquisition, Moody's said it estimates that Samsung’s leverage will rise from the current level of about 0.2x to about 0.3x, a level still consistent with the A1 senior unsecured rating.

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