Issue: Aug 2017


KSS And Takata Reach Agreement In Principle Regarding Purchase Of Substantially All Of Takata Assets



by Mark Fireman

Key Safety Systems ("KSS"), a global leader in mobility safety headquartered in Sterling Heights, Michigan, USA, and Takata Corporation ("Takata"), a leading global supplier of automotive safety systems such as seat belts, airbags and child seats, announced that they have reached an agreement in principle to sponsor a restructuring plan for the purchase of substantially all of Takata's global assets and operations by KSS for an aggregate purchase price of $1.588 Billion (approximately ¥175 billion)1, subject to certain adjustments at closing.

 

Under the agreement, KSS will acquire substantially all of Takata's assets, except for certain assets and operations that relate to Takata's manufacturing and sale of phase-stabilized ammonium nitrate (PSAN) airbag inflators (collectively, the "PSAN Assets").  It is expected that Takata's PSAN-related operations will be run by reorganized Takata following the transaction closing and eventually will be wound down.

 

By combining substantially all of Takata with KSS, the transaction would form a leading global safety supplier with approximately 60,000 employees in 23 countries focused on serving customers and providing superior products and innovation in the rapidly evolving auto safety industry.

 

Jason Luo, President & CEO of KSS, said: "Takata has deep management talent, a dedicated work force and a long history of exceptional customer service.  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 have not diminished.  We look forward to finalizing definitive agreements with Takata in the coming weeks, completing the transaction and serving both our new and long-standing customers while investing in the next phase of growth for the new KSS."      

 

Shigehisa Takada, Chairman & CEO of Takata, said: "KSS is the ideal sponsor as we address the costs related to airbag inflator recalls, and an optimal partner to the company's customers, suppliers and employees.  The combined business would be well positioned for long-term success in the global automotive industry.  Throughout this process, our top priorities have been providing a steady supply of products to our valued customers, including replacement parts for recalls, and a stable home for our exceptional employees.  This agreement would allow that to continue."

 

The proposed structure for the potential transaction is intended to minimize transaction risk and supply chain disruption concerns for Takata's OEM customers.  The companies anticipate a quick and seamless integration, utilizing the combined strengths of their respective management teams to implement a smooth transition.

 

KSS will continue to support Takata's customers, suppliers and employees and embrace and honor Takata's Japanese heritage:

 

*            KSS plans to retain substantially all of Takata's employees across the world on comparable employment terms as currently provided.

 

*            KSS has held in-depth discussions with Takata's major OEM customers and has jointly developed a transaction structure and operating plan to facilitate ongoing supply of Takata parts. This should provide continuity of supply to Takata's customers and confidence to Takata's employees, suppliers and other key stakeholders.

 

*            KSS plans to continue to support and utilize Takata's presence in Japan, and does not intend to shut down any of Takata's manufacturing facilities there. Furthermore, KSS intends to establish an Asia regional headquarters in Tokyo, which should create new jobs in Japan, and plans to retain Takata's existing non-PSAN supplier contracts to maintain an uninterrupted supply chain. KSS also intends to invest in many of Takata's other worldwide manufacturing facilities and technology and R&D centers.

 

KSS has substantially completed its due diligence, and Takata and KSS are working toward finalizing a definitive agreement in the coming weeks.  Takata has determined that it is in the best interests of the company and its stakeholders to address the recall-related issues in conjunction with the proposed sale.  Accordingly, with KSS as plan sponsor, proceedings have commenced under the Civil Rehabilitation Act in Japan and in the United States of America under Chapter 11 of its bankruptcy code.  Subject to successful completion of the in court proceedings and other closing conditions, including certain regulatory approvals, KSS expects transaction closure can occur in the first quarter of 2018.

 

Further information regarding the proceedings can be found at www.takata.com <http://www.takata.com/> .

 

Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel, KPMG is serving as financial advisor, Jefferies LLC is acting as lead financial advisor while UBS Investment Bank also provides financial advice to KSS.

 

Nagashima Ohno & Tsunematsu and Weil, Gotshal & Manges LLP are serving as legal counsel to Takata. PricewaterhouseCoopers is serving as financial advisor, and Lazard is serving as investment banker to Takata.  

 

About Key Safety Systems

 

Key Safety Systems (KSS) is a global leader in mobility safety through the system integration and performance of safety-critical components to the automotive and non-automotive markets serving the active safety, passive safety and specialty product sectors. Through highly specialized design, development, and manufacturing, KSS' technology is featured in more than 300 vehicle models produced by over 60 well-diversified customers worldwide. Since commencing business as a United States start-up, serving Detroit automakers in 1916, KSS continues today with an entrepreneurial and pioneering spirit. KSS is headquartered in Sterling Heights, Michigan, with a global network of more than 13,000 employees in 32 sales, engineering, and manufacturing facilities. The company has 5 main technical centers located in the key regions of the Americas, Europe and Asia. It is a wholly owned subsidiary of Ningbo Joyson Electronic Corp. (SHA: 600699) ("Joyson Electronics").

 

About Takata

 

Takata Corporation is a leading global innovator and supplier of automotive safety systems, including airbag systems, seat belts, steering wheels, electronics, sensors, and child restraint systems, and supplies all major automotive manufacturers in the world. Headquartered in Tokyo, Japan, it operates 56 plants in 20 countries with approximately 46,000 global employees worldwide.

 



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