Airbag maker to shortlist bidders

TAKATA, the embattled Japanese airbag supplier that has put itself up for sale after triggering the motor industry’s biggest safety recall, aims to shortlist two to three candidates by October, people familiar with the process say.

Bidders for Tokyo-based Takata had been asked to submit their proposals, said the people, who asked not to be identified because the information is confidential. Suitors included Carlyle, which is working with Chinese-owned airbag manufacturer Key Safety Systems; Daicel, a Japanese maker of airbag inflators that is jointly bidding with Bain Capital; and KKR, they said.

The sale will be closely scrutinised by major car makers, which are likely to spend the next several years recalling airbag inflators that can rupture and shoot deadly shards at vehicle occupants.

Takata set up a committee in February that has been negotiating with its car-making customers, led by Honda, on the costs related to replacing the defective parts linked to 15 deaths worldwide.

“It may take time given the need to reach agreement with various stakeholders,” Shintaro Niimura, a credit analyst at Nomura Securities, said. “The Japanese car makers, foreign car makers, all have different interests.”

Some of the bidders were considering the possibility of some form of bankruptcy proceedings for Takata to mitigate the liabilities, said the people. A person with knowledge of the restructuring process said in May that Takata would seek to avoid bankruptcy and look for buyers that could take a controlling stake and carry the company through its crisis. Takata is working with Lazard.

Representatives at Takata, Lazard, Carlyle, Bain Capital and KKR declined to comment. Daicel said it could not comment. Calls to Key Safety System outside business hours were not answered.

Almost 70-million Takata airbag inflators are scheduled for replacement by 2019, the largest and most complex vehicle safety recall in US history. On Friday, General Motors, asked US safety regulators to delay by a year the mandatory recall of almost 1million vehicles with airbags made by Takata, saying the designated models had not been shown to carry the same risk as others linked to deaths and injuries.

Takata has a market value of $334m. The stock has plunged 87% since January 2014.