April 27, 2024

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[THE INVESTOR] Harman International shareholders have dropped a class action lawsuit against the directors of the company for selling the US auto parts maker short to Samsung Electronics, according to sources on Aug. 1.

The group of shareholders filed the suit in January with the Delaware Chancery Court against Harman CEO and President Dinesh Paliwal and other directors after Harman’s top executives agreed on the deal to sell the US firm to Samsung for 9 trillion won (US$8 billion) in November 2016.

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The shareholders accused the Harman execs for failing to seek potential buyers other than Samsung to raise the takeover price and to provide adequate information of the acquisition deal, among others.

After the seven-month long legal battle, the Harman shareholders have accepted the arbitration of the court, according to sources. The legal fees spent for the lawsuit so far, at around US$195,000, will be covered by the Connecticut-based automotive tech firm.

“The Harman shareholders may have thought the merger with Samsung, one of the world’s largest chip, display and electronics firms, was not a bad idea after all,” said a market watcher said.

The 9-trillion-won acquisition deal is line with the Korean tech giant’s efforts to expand its role in the connected automotive market.

Harman operates as a standalone subsidiary of the Korean firm and is still led by CEO Paliwal.

By Kim Young-won (wone0102@heraldcorp.com)