Key Safety Will Drop Takata Name, Boost Air-Bag Ties With Daicel
(Bloomberg) -- Key Safety Systems Inc., the Chinese-owned U.S. air-bag maker that agreed to buy Takata Corp., plans to unify the products under its own brand and expand ties with other inflator suppliers including Japan’s Daicel Corp.
Key Safety will scrap the Takata name, except maybe in selected areas such as racing, with the decision to be made as the two companies integrate their business, Ron Feldeisen, senior vice president of Sterling Heights, Michigan-based Key Safety, said in a phone interview.
Takata filed for creditor protection in the U.S. and Japan this week after buckling under liabilities from millions of recalled air bags that have been blamed for more than a dozen deaths worldwide. Key Safety’s $1.6 billion purchase will exclude Takata’s manufacturing and sale of ammonium nitrate inflators, whose production will be wound down after the orders for replacement parts are fulfilled. Daicel currently supplies the devices to both companies.
Key Safety, bought by China’s Ningbo Joyson Electronic Corp. last year for $920 million, has been accelerating the production of air-bag inflators. It received orders of more than $4 billion last year alone, some of which were from Takata’s former clients, Ningbo Joyson CEO Tang Yuxin said in April.
“In terms of inflators, we value our longstanding relationship with our suppliers such as Daicel, and they will have an opportunity to grow with us,” Feldeisen said. “We are expanding our internal capability and at the same time expanding with our suppliers.”
In a separate interview with Bloomberg Television’s Betty Liu and Yvonne Man, Key Safety Chief Financial Officer Joe Perkins said the company is confident that it is shielded from the liabilities of Takata’s air-bag recalls with its purchase.
“In doing the deal structuring which has been a very complex process we’ve ensured the transaction structure solves the protection of the new company,” Perkins said. “Obviously it’s critical in the context of maintaining supply for our customers that we have a sound structure to protect the new company going forward and we are very, very confident of that.”
Takata is unable to disclose the total of its liabilities as the company hasn’t reached an agreement on how to split the recall costs with the automakers, Nobuaki Kobayashi, a member of Takata’s steering committee, said at the news conference. The Chapter 11 bankruptcy in Delaware listed more than $10 billion in liabilities, including claims from automakers including Honda Motor Co. -- the biggest user of the air bags -- and Toyota Motor Corp. as well as individuals who have brought class-action lawsuits.
Moody’s Investors Service said that the acquisition of Takata is credit negative for Key Safety but doesn’t affect its ratings.
Carmakers including Toyota and Honda said they may not be reimbursed for the majority of their recall-related claims by Takata. Seventeen vehicle makers including BMW AG and Tesla Inc. were named as unsecured creditors with unknown claims related to recalls and indemnification, according to Takata’s Chapter 11 bankruptcy filing.
The sale to Key Safety and the bankruptcy proceedings are expected to be completed by the first quarter of next year, with a definitive agreement to be signed in the next few weeks, the companies said.