Shanghai’s Joyson Electronic steps in to save bankrupt airbag firm Takata
Joyson’s US arm troubled to buy Takata assets and businessfor no more than US$1.59 billion, bit not its PSAN business
Takata, the troubled Japanese drivers’ air bag supplier, is being bought out of bankruptcy by KSS, a US-based firm owned by China’s Ningbo Joyson Electronic Corp.
Key Safety Systems (KSS), the American car-components manufacturer, has reach preliminary agreement to take over Takata’s assets and business for no higher than US$1.59 billion, according to a filing by Joyson to the Shanghai Stock Exchange on Monday.
Faults in Takata’s airbags prompted one of the industry’s biggest ever safety recalls, and have been linked to at least 17 deaths around the world, with the company pledg replace tens of millions of defective air-bag inflators used by 19 car and truck makers around the world, from Tesla , to Toyota Motor Corp.
Its been searching for financial backers to help it face mounting recall costs over the potentially deadly car air bags.
KSS will buy nearly all of Takata’s assets, except for some assets and operations linked to Takata’s problematic “phase-stabilised ammonium nitrate” airbag inflators, the firm said.
Yale Zhang, managing director with Shanghai based auto business consultancy Automotive Foresight, described the PSAN business as “a bomb”, a notorious business that no potential buyer would consider taking over.
But even excluding that part, he still thinks Joyson was making “high-risk investment”, taking over the scandal-ridden rest of the company.
“On one hand, the new owner will have to deal with the devastating debts running up at Takata, while on the positive side, the combined company now becomes the world’s largest airbag company, which will later benefit significant economies of scale,” he said.
“It remains a concern, however, whether old clients of Takata will switch to its competitors after all this,” he said. “Everything depends on how the new Chinese firm will lift its image and integrate Takata into its own assets
According to the filing, “KSS will sign related agreements with Takata’s clients, to ensure orders in future, and that they will be insulating from any risks stemming from the air bag recall”.
TK Holdings, Takata’s US operations, filed for Chapter 11 bankruptcy in Delaware on Sunday with liabilities of US$10 to 50 billion, while the Japanese parent filed for protection with the Tokyo District Court early on Monday, Reuters reported on Monday.
Takata’s total liabilities stand at 1.7 trillion yen (US$15 billion), Tokyo Shoko Research estimated.
The filing said uncertainties still exist whether the deal will be completed, pending due dilligence and final negotiations.
The filing, however, said if the Joyson buy out is completed it will significantly improve the Chinese company’s status in the global auto supply chain, making it a world leading auto safety supplier.
If signed off, it would be Joyson’s third international deal after it acquired Michigan-based safety technology company Key Safety Systems for US$920 million last year.
In June 2011, it took a 74.9 per cent stake in German auto supplier Preh, which focused on control units and sensor systems, for an undisclosed amount.
Joyson listed in Shanghai in December 2011. Sales in the fiscal year ended March 2016 totaled about 18.5 billion yuan (US$2.7 billion).