Is Salvation Near for Fallen Airbag Giant Takata?

Steph Willems
by Steph Willems
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is salvation near for fallen airbag giant takata

The company behind one of the largest safety recalls in automotive history might have a lifeline thrown its way.

Takata, the manufacturer at the heart of the exploding airbag scandal, is being courted by private equity firms, Bloomberg reports, with at least one high-profile company already in close talks.

Investment firm KKR & Co. is eyeing a takeover of the beleaguered company, which manufactured airbag inflators linked to at least 10 U.S. deaths, 100 injuries, and the subsequent recall of nearly 70 million vehicles.

Any company thinking of taking over Takata faces great risk, given the company’s awful financial situation. The company plans to cash in most of its shares in other companies, and a worse-case scenario — a full recall of every potentially affected airbag — could cost up to $24 billion.

No one wants to be stuck paying all (or even part of) that bill.

Former clients, including Honda, dropped Takata as a supplier in the wake of the scandal. The hunt for financial salvation began in earnest earlier this year, with company president Shigehisa Takada offering to resign if investors called for it.

Besides finding the cash to pay for recalls and fines, Takata also needs to be able to ship its other products without work stoppages in order to stay afloat.

The Department of Transportation accelerated the recall earlier this month due to the time factor involved in the malfunctions. Many of the ammonium nitrate inflators were shipped without a chemical drying agent, which causes the mixture to become unstable in humid conditions.

The airbag can then explode during a vehicle collision, spraying shrapnel into a driver’s face.

Steph Willems
Steph Willems

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  • MBella MBella on May 26, 2016

    I wouldn't count on this being salvation. Too me, it seems more like sharks smelling a very bloody and wounded animal flopping around.

  • APaGttH APaGttH on May 26, 2016

    Having worked for 2 private equity firms in my life I can tell you there is only thing they care about. IBITDA, IBITDA, IBITDA. That's it. I would not consider private equity investment as "salvation." Given all the corners Takata cut, I'm not sure how they could squeeze anymore blood out of this stone, sans cutting it up into itty bitty pieces.

    • See 3 previous
    • APaGttH APaGttH on May 26, 2016

      @Corey Lewis They have bought up a TON of arms manufacturers, and when they do, the product quality goes to complete crap. IBITDA. IBITDA. IBITDA.

  • CincyDavid CincyDavid on May 26, 2016

    Isn't cerberus the 3 headed dog that guards the entrance to the underworld? Perhaps it's an apt name for the company.

  • CincyDavid CincyDavid on May 26, 2016

    Would that make them cerberi when it's pluralized? I was just reading that they were supposed to keep souls from escaping hell...