Southfield/Hong Kong/Tokyo: Bain Capital and PAG Asia Capital are evaluating bids for Takata Corp., joining KKR & Co. among private equity firms with an interest in the Japanese air-bag supplier behind a record safety recall, according to people familiar with the matter. Takata’s shares surged.
The discussions are at an early stage and may not lead to formal offers, the people said, asking not to be identified as the deliberations are private. Takata’s most pressing issues are establishing the extent of its recall liabilities, and persuading carmakers to continue doing business with the company, two aspects that will be key for potential buyers in weighing prospective bids, another person said.
Representatives for Hong Kong-based PAG Asia and Tokyo-based Takata declined to comment. Boston-based Bain didn’t immediately respond to a request for comment. Takata’s shares jumped as much as 12% and traded 7.7% higher to ¥461 as of 9:18am. in Tokyo trading, while the benchmark Topix index gained 0.7%.
Takata appointed an external steering committee in February to draw up a restructuring plan for the company, which is facing billions of dollars in recall costs, the majority of which are being borne by automakers. The five-member group, which is negotiating with car makers on the sharing of the recall costs, last month hired Lazard to look for investors.
China’s Ningbo Joyson Electronic Corp. may also be interested in Takata assets, Crain’s Detroit Business reported. Jason Luo, chief executive officer of Key Safety Systems, told the magazine that Joyson is looking to add to Key, which it bought this year for about $920 million. Chen Yang, a spokesman of Ningbo Joyson, said on Thursday that the company doesn’t have detailed information at this point.
Takata is aiming to complete the restructuring by fall and is open to the idea of a joint bid comprising a financial investor and a strategic partner, as automakers have expressed a preference for the new owners to have experience in manufacturing and quality control, according to two people.
Automakers are less likely to be interested in buying Takata, because the air-bag supplier sells to multiple carmakers, which would raise concerns about the safeguarding of commercially sensitive information, two people said.
At least 13 deaths, including 10 in the US, have been linked to defective Takata air-bag inflators that can deploy too forcefully, rupture and spray plastic and metal parts at drivers and passengers. The number of air bags recalled may exceed 100 million worldwide after regulators’ latest demands for expansions in the US and Japan.