Harman accepts bid by 2 firms

Harman International Industries Inc. said Thursday that it had agreed to be acquired by Kohlberg Kravis Roberts & Co. and Goldman Sachs Group Inc.’s private equity unit for about $8 billion.

Harman makes electronics systems for cars that integrate stereos, global position systems and DVD video systems. In addition to home audio systems, it also makes loudspeakers and sound systems for concert halls, stadiums and airports.

The company has been benefiting from a move by automakers to combine multiple in-car entertainment systems onto one technology network, analysts said.

Under the terms of the deal, Harman stockholders would receive $120 in cash for each share they own. That represents a 17% premium over Harman’s closing stock price Wednesday.

As an alternative to cash, Harman’s stockholders could elect to exchange some or all of their stock for shares in a new corporation being formed by the buyers in a “stub” arrangement.

The offer for Harman shareholders to invest along with the private equity firms follows a similar proposal in the recent auction of radio broadcasting giant Clear Channel Communications Inc.

Clear Channel ultimately chose to get a higher amount of cash rather than a minority stake alongside the new private owners, but the proposed stub provisions come as private equity deals have met increasing resistance from public shareholders, particularly mutual funds.

Some funds have opposed deals to take companies private, prompting some private equity buyers to ponder how to best handle the desire of public shareholders to benefit from the potential future growth of companies.

Harman shares climbed $19.94 to $122.50, suggesting that investors believed that another bidder could emerge, analysts said.

Washington-based Harman may solicit other bids for a 50-day period, which ends June 15.

The Harman takeover bid values the audio-equipment company at 27 times forecasts for 2007 earnings, compared with an average valuation for the consumer electronics sector of about 18 times earnings, analysts said.