Takata Restructuring Delayed as Bidders Evaluate Business

  • Air-bag maker seeks buyer to tide over biggest safety recall
  • Takata said in November it aims to finalize buyer by year-end

Takata Corp.’s selection of a potential buyer will miss the year-end target as the shortlisted bidders need more time to review the air-bag maker pummeled by a record auto-safety recall of its products, according to people familiar with the matter.

The successful bidder may be named in the January-to-March quarter, the people said, asking not to be identified as the negotiations are private. Takata and its financial adviser Lazard Ltd. have asked prospective buyers to complete the due diligence in February, two of the people said. The Tokyo-based manufacturer had said last month it was working to find a buyer and finalize its restructuring plan by year-end.

“This will be a high-risk, high-return investment for the bidders and there are so many things they will have to sort out before making an official bid,” said Koji Endo, an analyst at SBI Securities Co. “Nobody can really calculate future liabilities at this point.”

Shares of Takata rose 1.8 percent to 621 yen, the highest level since Nov. 29, in Tokyo. The stock had gained 69 percent since the beginning of November as of Thursday’s close on speculation the company may secure a buyer by the end of the year.

The air-bag maker is leaning toward bids from Autoliv Inc. and Key Safety Systems Inc., people familiar with the matter have said. The two gained an edge because both have technical expertise in air-bag systems and safety equipment and automakers view them as able to lower costs and improve quality of Takata parts.

In the final round of due diligence, the shortlisted companies will have access to Takata’s detailed business data and technology plans, allowing them to refine their bids, one of the people said.

Representatives for Takata, Autoliv and Key Safety Systems declined to comment on the restructuring schedule. A representative for Lazard wasn’t immediately available for comment.

The eventual winner faces years of replacing Takata air bags linked to at least 17 deaths and more than 100 injuries. The buyer will potentially be on the hook for recall costs and other liabilities while having to ensure a stable supply of replacement parts to automakers. Regulators have ordered recalls scheduled through at least 2019 that could eventually exceed 100 million air bags used by more than a dozen automakers, including Honda Motor Co., Volkswagen AG and General Motors Co.

— With assistance by Masatsugu Horie

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