At Least $1 Billion Investments Said to have been Offered by Takata Bidders

Suitors seeking to buy the troubled air bag maker Takata Corp. are reported to have offered $1 billion to $2 billion.

Each of the five suitors seeking to buy the company have reportedly made the offers, a person with knowledge of the matter was quoted in the media as saying.

The person, who asked not to be identified because the discussions are confidential reportedly revealed to the media that the Japanese company behind the auto industry’s biggest recall ever may be leaning toward three bids. These are the buyout firm KKR & Co. and bumper supplier Flex-N-Gate Corp., Bain Capital  and air-bag inflator maker Daicel Corp.

Te source reportedly said that the bids of air bag makers Autoliv Inc. and Key Safety Systems Inc. were made less favorable as they are insisting on the option that Takata should go for bankruptcy even while all five groups have proposed bankruptcy for the Japanese company.

The number of vehicles impacted by air bag recalls could exceed 100 million devices worldwide and this week Takata met with officials from Honda Motor Co. and about a dozen other customers impacted by the recalls. Following the death of a Honda City driver last week in Malaysia, the number of fatalities tied to Takata’s inflators reached at least 16 worldwide. Fatalities occur as the airbags can rupture and spray plastic and metal shards at vehicle occupants on the drivers and the occupants.

While those for Bain, Flex-N-Gate and Key Safety Systems didn’t immediately respond to requests for comment from the media, representatives for Takata, its financial adviser Lazard Ltd., KKR and Daicel declined to comment. An Autoliv spokesman said the company doesn’t comment on speculation.

How to divvy up responsibility for billions of dollars in recall costs and potential legal liabilities stemming from its faulty air bags is the central issue facing Takata’s customers, which also include General Motors Co. and Volkswagen AG.

People familiar with the proposal have said that Lazard has proposed setting up an independent legal fund using contributions from Takata, new investors and automakers. The idea has been reported to have been resisted by Honda, which owns about 1.2 percent of Takata shares and is its largest customer.

Sharing the burden pf legal bills may help the company solidify a sale and would factor in whether bankruptcy would be necessary even while automakers have been reluctant to helping pay Takata’s legal bills. Takata air bags, seat belts and other components generated 718 billion yen ($6 billion) in sales for the fiscal year ended in March and the top priority for automakers is to ensure a steady supply of those products. Dropping the company’s market capitalization to about $290 million, Takata shares have lost nearly three-quarters of their value during the past year. The shares fell 1.4 percent to 355 yen in Tokyo.

(Adapted from Bloomberg)


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