China’s Key Safety plans to bid for Takata

KEY Safety Systems, the world’s fourth-largest air bag maker that was acquired by a Chinese parts maker, plans to bid for Japan’s Takata Corp, which is seeking buyers to overcome record recalls, said a source.

Key Safety has received an invitation from Takata and will review the company’s business operations to prepare for the bid, the source added.

Key Safety, owned by China’s Ningbo Joyson Electronic Corp, is pressing ahead even as an audit commissioned by Takata and Honda Motor Co found more evidence that the supplier manipulated air bag inflator testing data.

SYNERGISTIC DEAL:

Takata has been working on a restructuring plan and is said to be open to a sale to a private equity partner, a parts supplier or a combination.

As many as 15 deaths, including 10 in the United States, have been linked to its defective air bag inflators, which can rupture and spray plastic and metal shards at drivers and passengers.

Ruptures also have led to more than 100 serious injuries, according to the National Highway Traffic Safety Administration (NHTSA).

“For Takata to continue as a safety parts supplier, it definitely needs the help from Key Safety Systems,” said Ken Miyao, an analyst with market researcher Carnorama.

“Key Safety Systems will also find Takata’s customer base and air bag production know-how useful. So it will benefit both companies if they join force.”

Takata is not in a position to comment as it has appointed an external committee to handle the restructuring plan, said Akiko Watanabe, a company spokesman.

Joyson bought Key Safety for about US$920 million (RM3.73 billion) in cash after US regulators fined Takata and ordered it to phase out the use of ammonium nitrate as its air bag inflator propellant.

Combining with Takata would create the world’s No. 2 air bag supplier by sales, behind Sweden’s Autoliv Inc, according to Valient Market Research.

It would also broaden Joyson’s access to Japanese carmakers led by Honda. Takata and Honda jointly commissioned a third-party audit of how the supplier validated the performance of its air bag inflators.

The review has turned up many instances of Takata engineers selectively editing validation reports, said Brian O’Neill, the former president of the Insurance Institute for Highway Safety who’s led the audit.

The US NHTSA in May ordered Takata to recall air bag inflators through 2019, potentially doubling the number of components being replaced.

General Motors Co said on Wednesday that it plans to prove that the inflators in its vehicles don’t pose an unreasonable risk to safety. Bloomberg