By on May 26, 2016

Takata Agua Prieta Mexico Facility

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.

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11 Comments on “Is Salvation Near for Fallen Airbag Giant Takata?...”

  • avatar

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

  • avatar

    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.

    • 0 avatar

      That’s what’ll happen. Here’s betting its Cerberus.

      • 0 avatar

        My thought too, and lets remember Cerberus’ solution for Chrysler and GM.

        Step 1: Buy up assets from GMAC finance arm

        Step 2: Try and convince GM to buy Chrysler even though Cerberus has the assets to prop up Chrysler and owns their finance arm

        Step 3: When GM refuses call all their floor financing loans to dealerships due immediately, and refuse to write paper on anyone with a FICO score below 720 – you know, to “encourage them” to buy Chrysler

        Step 4: Hold hand out for federal bailout and sell to the Italians even though they are a private equity firm with enough assets to bailout Chrysler on their own

        Step 5: Profit

        • 0 avatar

          Any time I see Cerberus as backer for -anything-, there’s a little dinger in the back of my head that goes of “Uh oh, that’s bad.”

          Guess who’s behind a small reinsurance company which has now found itself on the auction block?

          They’re the junkyard scrappers of finance.

          • 0 avatar

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


  • avatar

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

  • avatar

    Would that make them cerberi when it’s pluralized?

    I was just reading that they were supposed to keep souls from escaping hell…

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