On Sunday, Takata announced that competitor Key Safety Systems will acquire it in a $1.6 billion deal. The company faces billions of dollars in lawsuits connecting to its airbag recall, and its American division filed for Chapter 11 bankruptcy in Delaware, where it claimed liabilities of $10 billion to $50 billion.
Shigehisa Takada, the chief executive, said the Takada family would cease to be involved in the business once the sale was completed. It was unclear when exactly that would be, however. Antitrust regulators in multiple markets must approve the deal, which would give Key Safety Systems about a quarter of the global airbag market, making it the second-largest supplier in an industry dominated by just a handful of companies.
Takata’s downfall began about 10 years ago, when it was discovered that defective airbag inflators were linked to as many as 17 deaths worldwide.
"We caused troubles for our supporters, those who cooperated with us and the creditors," chairman Shigehisa Takada told reports at a news conference. "On behalf of Takata, I apologize deeply from the bottom of my heart."
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Takada bowed to the reporters before leaving.
Some might suggest that fault for the undoing rests solely with Takata, whose executives admitted that the company withheld information about the inflator problem for several years. Even after its inflators started blowing up, the company failed to come clean. Add to that a $1 billion fine for wire fraud in the U.S. and a $125 million fund for victims’ families, and it’s easy to see how things spiraled.
The New York Times reported:
Takata’s bankruptcy is thought to be the largest ever by a Japanese manufacturing company. The cost of the recalls continues to mount, and Takata said it could not yet estimate the scale of the claims it would ultimately face. Tokyo Shoko Research, a credit-rating agency, estimated the company’s current liabilities at 1.7 trillion yen, or roughly $15 billion.
Despite this, Chinese-owned and Michigan-based Key Systems still feels optimistic that it can salvage some business value from its longtime rival.
Key System’s chief executive, Jason Luo, gave the following statement:
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 has not diminished.
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