Takata Surges on Report of KKR Plan to Support Air-Bag Maker

  • U.S. regulators say company will remain responsible for recall
  • Family-run company says it hired Lazard to help find a buyer

Takata Surges on Report of KKR Support

Takata Corp. surged by the daily limit in Tokyo trading after the Nikkei newspaper reported KKR & Co., the private equity firm, plans to offer support and take control of the company responsible for the biggest safety recall in auto industry history.

Takata jumped 21 percent in Tokyo, the daily limit, but its market value of 38 billion yen ($346 million) is still just a 10th of its 2007 peak.

KKR aims to take control of the company and lead a restructuring effort in place of the founding Takada family, the Nikkei reported. Takata said earlier it retained Lazard Ltd. to pursue investment in the company. Akiko Watanabe, a spokeswoman for Takata, and Steve Okun, a Singapore-based spokesman at KKR, declined to comment on the report.

Takata air bags can deploy too forcefully, rupture and spray plastic and metal parts at drivers and passengers. At least 13 deaths in the U.S. and Malaysia have been linked to its defective air bag inflators. Automakers led by Honda Motor Co. had recalled at least 60 million air bags globally before U.S. regulators this month ordered the replacement of as many as 40 million more.

For more on the KKR bid, and the history of private equity firms in the automotive industry, click here

“It is in the best interests of all Takata stakeholders for Takata and its automotive customers to reach a consensual resolution that addresses the costs of the inflator issues while enabling Takata to remain a viable and valued global supplier to the automotive industry,” said Hideaki Sudo, chairman of the Takata steering committee set up in February to develop a restructuring plan, in a statement Wednesday announcing the hiring of Lazard.

Up for sale is a company that started as a textile maker in 1933 and is still controlled by the founding Takada family.

“Takata’s planned restructuring does not change the responsibility of both the company and auto manufacturers to carry out the inflator recalls,” said Bryan Thomas, a spokesman for the U.S. National Highway Traffic Safety Administration, which is managing the Takata air-bag recall with 17 different automakers.

Any Takata takeover won’t immediately affect consumers with defective air bags either, said Matt DeLorenzo, managing editor at Kelley Blue Book.

“Whether or not Takata goes out of business, the car companies are still responsible to source the parts and do the recall,” DeLorenzo said. “Looks like KKR is doing some bottom fishing for whatever upside potential there may be.”

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