Takata files for bankruptcy protection, announces $1.6bn acquisition

Takata, a global supplier of automative safety systems such as seat belts, air bags and child seats, filed for bankruptcy protection in the US and Japan and announced it would be bought for $1.6bn by Key Safety Systems.

The company's US operation, TK Holdings, filed Chapter 11 bankruptcy in Delawere on Sunday, while the Japanese parent filed for protection with the Tokyo District court early on Monday. Its' total liabilities stand at 1.7trn yen ($15bn), according to estimates by Tokyo Shoko Research.

The companies expected to seal definitive agreements for the sale in coming weeks and complete the twin bankruptcy processes in the first quarter of 2018.

Takata faced tens of billions of dollars in costs and liabilities from decades of recalls and lawsuits over its airbags, which have been linked to at least 17 deaths worldwide.

It is believed some of the airbags contained faulty inflators which when expanded with too much force, spray metal shrapnel.

An agreement was reached in principle between Takata and US-based mobility safety company KSS for the latter to sponsor a restructuring plan for the purchase of "substantially" all of Takata's global assets for $1.6bn, apart from those relating to the airbags.

The proposed transaction was intended to minimize transaction risk and supply chain disruption concerns for Takata's customers.

KSS vowed to continue to support Takata's customers, suppliers and employees: "KSS will continue to support Takata’s customers, suppliers and employees and embrace and honor Takata’s Japanese heritage", the company said in a press release posted to its website.

The two companies together will have a combined workforce of 60,000 employees spread across 23 countries.

Jason Luo, president and CEO of KSS, hailed the "underlying strength" of Takata's employee base.

"Takata has deep management talent, a dedicated work force and a long history of exceptional customer service. Although Takata has been impacted by the global airbag recall, the underlying strength of its skilled employee base, geographic reach, and exceptional steering wheels, seat belts and other safety products have not diminished," he said.

For his part, Shigehisa Takada, Chairman & CEO of Takata, added:“KSS is the ideal sponsor as we address the costs related to airbag inflator recalls, and an optimal partner to the company’s customers, suppliers and employees. The combined business would be well positioned for long-term success in the global automotive industry".