Nica Onate / IIHS | November 22, 2016 12:25
Restructuring plan by year-end
Embattled autoparts supplier Takata has narrowed down bidder companies from five to two namely, Autoliv Inc. and Key Safety Systems Inc.
Since the start of November 2015, the company has lost more than 60-percent of its market capitalization due to a global recall of their defective airbag inflators. The National Highway Traffic Safety Administration (NHTSA) announced then of over 85 million vehicles to be recalled in the US.
Manufacturers such as Honda, Ford, Mazda, Nissan, and Toyota have long dropped Takata as their airbag supplier.
Now, the company aims to find a buyer that will carry out the biggest safety recall and proceed with restructuring plan by the end of 2016. A total of five companies are trying to get a hold of the Takata, including private equity firm KKR & Co., Autoliv Inc., Key Safety Systems Inc., auto-parts suppler Flex-N-Gate Corp, and Bain & Co. and Daicel Corp. of Japan in a joint pitch.
Among these, two bidders are most likely to absorb Takata because of their technical expertise in airbag system and safety equipments. Car manufacturers also expect that these two companies will be able to lower costs and improve quality of Takata parts.
These two bidders are Autoliv Inc. and Key Safety System Inc. According to the report, automakers prefer Autoliv because its larger and more capable of handling a recall. Key Safety, on the other hand, makes airbag inflators and knows how to handle a deal.
However, antitrust scrutiny may turn out to be a problem for Autoliv since it’s already the the world’s largest airbag maker. By absorbing Takata, it could end up with more than half the global market share. Meanwhile, Key Safety as the fourth-largest airbag maker could become the second-largest according to Valient Market Research.
Reports said that the deal may still lead to Takata seeking some kind of bankruptcy protection in the U.S., which is an option suggested by all bidders.Thomas Jonsson, Autolive spokesman and Chad Tendler, outside spokesman working for Key Safety refused to provide any commentary. Meanwhile, Jared Levy, an outside spokesman for Takata, also refused to give any comment.
According to reports, the death toll continues to rise after the first victim was killed in 2008. One of the most recent was on September 30, wherein a 50-year-old woman was killed in a Civic compact car due to the faulty airbags.