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Takata Bidders Said to Offer at Least $1 Billion Investments

  • Bids by Daicel-Bain, KKR, Flex-N-Gate said to be favored
  • Autoliv, Key Safety Systems said to insist on bankruptcy

Takata Corp. received offers for initial investment of $1 billion to $2 billion from each of the five suitors seeking to buy the troubled air bag maker, according to a person with knowledge of the matter.

The Japanese company behind the auto industry’s biggest recall ever may be leaning toward three bids: one by air-bag inflator maker Daicel Corp. and Bain Capital, and the others by buyout firm KKR & Co. and bumper supplier Flex-N-Gate Corp., said the person, who asked not to be identified because the discussions are confidential.

While all five groups have proposed bankruptcy for Takata, air bag makers Autoliv Inc. and Key Safety Systems Inc. are insisting on that option, making their bids less favorable, the person said. Discussions are ongoing and a buyer may not be decided soon, the person said.

Takata met this week with officials from Honda Motor Co. and about a dozen other customers affected by air bag recalls that could exceed 100 million devices worldwide. The number of fatalities tied to Takata’s inflators -- which can rupture and spray plastic and metal shards at vehicle occupants -- reached at least 16 worldwide following the death of a Honda City driver last week in Malaysia.

Representatives for Takata, its financial adviser Lazard Ltd., KKR and Daicel declined to comment, while those for Bain, Flex-N-Gate and Key Safety Systems didn’t immediately respond to requests for comment. An Autoliv spokesman said the company doesn’t comment on speculation.

Recalls, Litigation

The central issue facing Takata’s customers, which also include General Motors Co. and Volkswagen AG, is how to divvy up responsibility for billions of dollars in recall costs and potential legal liabilities stemming from its faulty air bags. 

Lazard has proposed setting up an independent legal fund using contributions from Takata, new investors and automakers, people familiar with the proposal have said. Honda, which owns about 1.2 percent of Takata shares and is its largest customer, has been said to have resisted the idea.

While automakers have been reluctant to help pay Takata’s legal bills, sharing that burden may help the company solidify a sale and would factor in whether bankruptcy would be necessary. The top priority for automakers is to ensure a steady supply of Takata air bags, seat belts and other components that generated 718 billion yen ($6 billion) in sales for the fiscal year ended in March.

Takata shares have lost nearly three-quarters of their value during the past year, dropping the company’s market capitalization to about $290 million. The shares fell 1.4 percent to 355 yen in Tokyo.

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