Chinese firm to purchase Japanese peer

Takata Corp. might be purchased by Joyson Electronics for nearly 1.6 billion U.S. dollars (about 10.86 billion yuan).

Decisive Chinese buyer

Japan-based Takata Corp. applied for bankruptcy protection Jun. 26 with liabilities of over 1 trillion yen (about 60.54 billion yuan).

Its U.S. subsidiary also applied for bankruptcy protection in Delaware, the U.S., with liabilities of around 10 billion to 50 billion dollars (about 68 billion to 340 billion yuan).

The company’s overall liabilities are estimated to be 128.54 billion yuan at least.

It is noteworthy that most core businesses of Takata will be purchased by Ningbo-based Chinese firm Joyson Electronics.

Joyson Electronics announced Jan. 26 that its subsidiary – U.S.-based Key Safety Systems and Takata have inked an asset purchase letter of intent.

Chen Yang, media director of Joyson Electronics, said if the transaction goes well, the status of Joyson Electronics on global auto supply chain will increase further, to effectively expand the capacity, exploit new market and strengthen technology.

The Chinese firm aims to establish a leading enterprise in the field of global auto safety.

Recall issue not involved in acquisition

The cause of Takata event was that the Japanese company added ammonium nitrate in the pump to ensure airbag opens automatically when this is a crash.

But the chemical deteriorates when it is exposed in wet air for long, and may even explode under high temperature.

The issue led to at least 17 people dead and more than 180 injured. So far, Takata has recalled about 100 million airbag inflators and thousands of cars.

Continuous recall, litigations costs and compensation for personal injuries made Takata living behind its means and overwhelmed.

Chen disclosed that the transaction targets at assets after Takata’s bankruptcy, which will avoid relevant liabilities and litigation risks.

Joyson Electronics will give the payment to Takata’s bankruptcy management committee, who will deal with the compensation and litigations. So how Takata deals with airbag recall has nothing to do with Joyson Electronics.

Preliminary agreement reached

In Jan., Takata and the U.S. Department of Justice reached an agreement to pay 850 million dollars to the compensation fund no later than early Mar. 2018.

Under such circumstance, the acquisition of KSS is undoubtedly a timely assistance.

Shigehisa Takata, CEO of Takata, said in a statement that they are dealing with the cost issue generated from airbag recall, while KSS is an ideal sponsor. It is also a client, supplier and best partner of Takata.

Joyson Electronics said whether they will sign a contract decides on following investigation and negotiation. They need to reach agreements with 14 vehicle producers and Takata bankruptcy management committee.

Therefore, this is still uncertainty exists in the acquisition.