Chinese-owned Key Safety Systems Inc has emerged as the leading bidder for Takata Corp, the embattled airbag maker that’s seeking a buyer after announcing the biggest safety recall in automotive history, according to people familiar with the matter.
A steering committee appointed by Tokyo-based Takata to spearhead its restructuring held advanced talks with Key Safety this week, said the people, who asked not to be identified because the discussions are private. Key Safety’s main rival in the auction, Autoliv Inc of Sweden, is more interested in purchasing parts of Takata if the Japanese company files for bankruptcy protection and needs to sell some business units, said one of the people.
As of yesterday in Tokyo, Key Safety, which is based in Sterling Heights, Michigan, hasn’t secured exclusive negotiating rights and hasn’t completed due diligence, said one of the people. Talks continue and a final agreement isn’t expected this weekend, the people said.
Representatives for Takata and Key Safety declined to comment. A call to Autoliv’s office in Japan outside regular office hours wasn’t answered.
If a deal is struck, it would end another long and difficult chapter for Takata. The supplier has admitted to hiding the deadly risks of its exploding airbags for about 15 years in an agreement to pay US regulators, consumers and car manufacturers $1bn in penalties. The mounting liabilities have forced the company to seek an acquirer that could get it through a costly restructuring process.
Takata faces a recall that’s expected to cover more than 100mn airbags. Its faulty products have been linked to at least 17 deaths worldwide. The new owner would have to work out a restructuring plan to minimise the supplier’s exposure to future liabilities, including the costs for replacing the airbags, and ensure a stable supply of replacement parts.
Key Safety, bought by China’s Ningbo Joyson Electronic Corp last year for about $920mn, is the world’s fourth-largest airbag maker with revenue of $1.6bn in 2015. Buying Takata would give Key Safety greater access to Japanese automakers and the combined company would pull closer in market share to leader Autoliv. Autoliv “would, under certain conditions, be interested in certain parts or participating in this restructuring,” chief executive officer Jan Carlson said on a February 2 conference call. “But this is, at the end of the day, an OEM decision.”
Both Autoliv and Key Safety are adding manufacturing capacity to increase airbag inflator production as Takata’s recalls boost demand.
Nikkei newspaper reported earlier that Takata’s external committee told automakers on Friday that Key Safety is the best option.