Harman's (HAR) $8 billion sale to Samsung demonstrates that companies with exposure to the connected car market continue to be targets. The deal comes weeks after Qualcomm's (QCOM) blockbuster $47 billion purchase of NXP Semiconductor (NXPI) , a leader in the market for connected car chips.
Harman has built and bought a portfolio of technology ranging from the infotainment systems that developed from its car audio packages, to cyber security, systems for wireless software updates and assisted driving.
While not a perfect match, Visteon (VC) develops an array of instrument clusters, displays, infotainment systems and telematics services that may be the nearest comparison to Harman's offering, RBC analyst Joseph Spak suggested in a note following the sale of Harman. Shares of Visteon are up more than 10% to about $77 from their close before the Harman deal. The company did not respond to a query about whether it would participate in consolidation.
Also like Harman, Mobileye (MBLY) develops advanced driver assistance systems. The Israeli company develops machine learning and other systems for smart and autonomous cars, and has partnerships with BMW, Delphi (DLPH) and others. Mobileye is up about 2% to nearly $40 from the close before the Harman deal.
Harman's sale could also boost the value of Delphi's infotainment offerings. Delphi has an $18 billion market cap, and would be a massive acquisition. Shares of Delphi have gained about 2% to $66.78.
In addition to Delphi, the large, global suppliers with connected car technology include Bosch, Continental, Aisin Seiki and Denso. These companies have broad portfolios but would be ungainly acquisitions.
"If someone wanted to get into the connected car space they would offer more than Harman," Gartner analyst Mark Hung said. "These companies are so big. It would take a lot to buy one of these guys."
Alpine Electronics has infotainment offerings similar to Harman's, Hung observed. The Japanese audio company did not respond to a query.
In the telematics field, one banker suggested that Italian company Octo Telematics could draw attention. The company has reportedly explored a sale or an IPO, but did not respond to a query.
The sale of Harman will not be the last connected car deal. The transaction reflects that even a company with Samsung's wherewithal felt the need to buy Harman rather than develop its own solutions in the tough-to-crack automotive supply chain.