Harman Sale A Mischievous Ruse

By Mel Lambert. The news being circulating in late July that Harman International Industries, parent company of Harman Pro Group, was being sold to a Middle Eastern operation caused a major surprise in many quarters--not least of which was Harman’s US corporate HQ. Several trusted news operations, including Reuters and Fox News, reported that the company was being bought by Arabian Peninsula Group, a private investment firm based in Kuwait. It seems that several fax messages had reached the desks of financial editors, details of which were dutifully reported on the news wires and subsequently picked up by several newspapers, causing rumors about the alleged buyout to spread quickly.? ?
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By Mel Lambert / Content-Creators.com

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??The news being circulating in late July that Harman International Industries, parent company of Harman Pro Group, was being sold to a Middle Eastern operation caused a major surprise in many quarters--not least of which was Harman’s US corporate HQ. Several trusted news operations, including Reuters and Fox News, reported that the company was being bought by Arabian Peninsula Group, a private investment firm based in Kuwait. It seems that several fax messages had reached the desks of financial editors, details of which were dutifully reported on the news wires and subsequently picked up by several newspapers, causing rumors about the alleged buyout to spread quickly.? ?

Faxed statements sent to a number of media outlets stated that APG planned to buy Harman in a public tender for $49.50 a share, a value that was twice the company’s latest closing price of $25.18. Reportedly, the fax messages quoted an executive from APG named Donald Parker – described as head of Arabian’s unit strategic investments--but lacked contact information. In reaction, Harman officials told reporters that the firm had never heard of Arabian Peninsula Group; so far it appears that nobody else knows anything about the firm. Reuters responded that since Kuwait has no financial regulator it was virtually impossible to check a business’s legitimacy. (The fax messages were said to have originated from a location with a Kuwaiti area code.)? ?

An interesting by-product of the rumor was a one-day 30 percent rise in Harman’s share price to close to $38--the highest intra-day trade since August 2008, and the stock’s first time above $30 since October--a hike that eventually maintained a 16 percent plateau. But it was short-lived; the denial sent Harman shares slumping when the New York market opened, and recently they fell 8.7 percent to $22.98. Nearly four times the typical number of shares changed hands on the day following the bogus news reports.? ?

Two years ago, Harman International agreed to a takeover bid for $8 billion from Kolhberg Kravis Roberts and the private-equity arm of Goldman Sachs, a deal that fell through after a closer examination of Harman’s financial performances. At that time, Harman stock was priced at $100, a value that rose 20 percent when news of the planned purchase first broke. Fifteen months ago Harman International shed more than 300 manufacturing and office staff at its Northridge campus, which was once its largest plant. ?

Harman International
www.harman.com