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Takata Talking With Potential Buyers

May 26, 2016
With billions still in potential costs related to its ongoing safety crisis, Takata could be sold for billions — and the Nikkei stock market loves that.

Embattled airbag maker Takata Corp., which is facing billions in possible costs for the biggest recall in automotive history, is in talks with potential buyers including KKR & Co., according to a person familiar with the matter.

Talks are at a preliminary stage and KKR isn’t the only candidate, said the person, who asked not to be named as the discussions are private. Akiko Watanabe, a spokeswoman for Takata, and Steve Okun, a Singapore-based spokesman at KKR, declined to comment.

Takata’s shares surged by 21%, the daily limit, in Tokyo on Thursday after the Nikkei reported earlier that KKR plans to offer support and lead a restructuring effort in place of the founding Takada family. Takata has hired Lazard Ltd. to pursue investment in the company as part of efforts that began earlier this year to develop restructuring plans. The shares had plunged 65% over the last year, dropping the company’s market capitalization to about 38.1 billion yen ($347.41 million).

“The market has been waiting for some sort of positive news for a long time, so it reacted sharply; after all, Takata is a company that has technology and makes important products,” said Mitsuo Shimizu, equity strategist at Japan Asia Securities Group. “There’s a question mark over whether an overseas investment fund will really exert a lot of effort to restructure Takata, because they may just sell it to others. Ideally, a Japanese manufacturer in the auto industry will be best savior for the interest of Takata.”

At least 13 deaths in the U.S. and Malaysia have been linked to defective Takata airbag inflators that can deploy too forcefully, rupture and spray plastic and metal parts at drivers and passengers. Automakers led by Honda Motor Co. had recalled at least 60 million airbags globally before U.S. regulators ordered the replacement this month of as many as 40 million more.

KKR raised $3.35 billion for its second special-situations fund in April, and the team, run out of the U.S., provides debt or equity to companies that have distressed capital structures or are undergoing events such as restructuring or mergers.

The company formed a venture with China Orient Asset Management Corp. to invest in credit and distressed assets in China. KKR failed in its bid for Lumileds, the components unit of Royal Philips NV’s lighting division, in March last year. That sale also included Philips’s Automotives lighting business.

By Masatsugu Horie and Ma Jie, with assistance from Craig Trudell and Cathy Chan.

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