Takata, Key Safety Systems ink $1.59 billion asset purchase agreement

By Caroline Salls

Pittsburgh, Nov. 21 – Takata Corp. signed a definitive asset purchase agreement under which Key Safety Systems (KSS) will acquire substantially all of Takata’s global assets and operations for a total purchase price of $1,588,000,000, according to a Takata news release.

Takata said the definitive asset purchase agreement is consistent with the agreement in principle announced on June 26.

Specifically, under the agreement, KSS will acquire substantially all of Takata’s assets, except for some assets and operations related to Takata’s manufacturing and sale of phase-stabilized ammonium nitrate (PSAN) airbag inflators.

Takata’s PSAN-related operations will be run by reorganized Takata following the transaction closing and will eventually be wound down.

Takata said it will continue to produce airbag inflator replacements to meet demands without interruption.

“We believe that the combined business will be well-positioned for long-term success in the global automotive industry,” Takata chairman and chief executive officer Shigehisa Takada said in the release.

KSS president Yuxin Tang said in the Takata release, “the combined company will enhance our ability to serve customers globally and provide superior products and innovation in the rapidly evolving auto safety industry.

“We enter this transaction in a spirit of partnership and anticipate executives and employees from both KSS and Takata together will play important roles – from initial integration through strategic execution.”

Customer support

As previously reported, Takata filed final forms of all definitive transaction documents with the U.S. Bankruptcy Court for the District of Delaware, including its Chapter 11 plan and restructuring support agreements under which Takata, KSS and a significant group of Takata’s original equipment manufacturer customers committed to support the global transaction.

The closing of the transaction is subject to bankruptcy court approval in both Japan and the United States, consenting OEM agreements and customer documentation, receipt of regulatory approvals and other customary closing conditions. The transaction is expected to close in the first quarter of 2018.

Takata said it intends to use the proceeds from the sale to meet requirements of a plea agreement with the Department of Justice, to satisfy administrative costs and expenses of the restructuring and to fund unsecured creditor recoveries.

Continued presence

KSS said in a separate release that it plans to continue to support and use Takata’s presence in Japan, and looks forward to working with all the Takata employees and manufacturing facilities in Japan and around the world.

KSS will finance the deal using a combination of debt and equity, the release said.

Skadden, Arps, Slate, Meagher & Flom LLP serves as legal counsel, KPMG serves as financial adviser and Jefferies LLC acts as lead financial adviser to KSS.

Nagashima Ohno & Tsunematsu, Weil, Gotshal & Manges LLP and Freshfields Bruckhaus Deringer LLP serve as legal counsel to Takata. PricewaterhouseCoopers serves as financial adviser and Lazard serves as investment banker to Takata.

Tokyo-based Takata manufactures and sells motor vehicle seat belts, airbags, steering wheels, interior trims and child restraint systems. TK Holdings, Inc. filed for bankruptcy on June 25 under Chapter 11 case number 17-11375.

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