Thursday, April 26, 2007

Harman International-Sidney, You're My Hero!

Last May 21st, I did a post on Harman International (HAR)-An Auto Parts Growth Story.

The company announced today that it has entered an agreement to be acquired by KKR and Goldman Sachs Capital Partners for $8 billion. The unique structure of this transaction will allow current Harman shareholders to participate in the newly structured company.

Shareholders can elect to receive cash of $120 or alternatively, may exchange some or all of their stock for the new corporation. Up to $1 billion of HAR stock may elect to participate in the new Corporation. Here is the press release.

Dr. Sidney Harman, the 88 year old founder and Executive Chairman of Harman will remain as Executive Chairman of the new company. His passion for creativity and integrity has shaped a great business. Of note, he is selling only half of his stock into the $120 offer and will tender the balance, together with the rest of the shareholders, on no special basis, to participate in the newly capitalized company.

Much like one of Berkshire Hathaway's managers, Dr. Harman's love of his business supersedes almost everything else. The ability to participate in the newly leveraged Harman International demonstrates a strong alliance with all shareholders. As Buffett describes the relationship with shareholders as a sense of partnership, Dr. Harman has demonstrated a similar responsibility.

And, by the way, record results for the second quarter and first half of the year. A remarkable result for a company that is 70% auto industry related.

Not often that you see an 88 year old executive step up to the plate for the next iteration of his company. Sidney, you are my hero!

Disclaimer: I, my family, and some clients have a current position in Harman International and Berkshire Hathaway.


Post a Comment

<< Home

< ? Market Blogs £ >