Takata shares surge on talk of KKR buyout

Takata's shares surged by 21 per cent, the daily limit, in Tokyo yesteday after the Nikkei reported that KKR plans to offer support and lead a restructuring effort in place of the founding Takada family.
Takata's shares surged by 21 per cent, the daily limit, in Tokyo yesteday after the Nikkei reported that KKR plans to offer support and lead a restructuring effort in place of the founding Takada family.PHOTO: REUTERS

TOKYO • Takata Corp, the airbag maker facing billions in possible costs for the biggest recall in automotive history, is in talks with potential buyers including KKR & Co, according to a person familiar with the matter.

Talks are at a preliminary stage and KKR is not the only candidate, said the person, who asked not to be named as the discussions are private. Takata spokesman Akiko Watanabe and KKR spokesman Steve Okun declined to comment.

Takata's shares surged by 21 per cent, the daily limit, in Tokyo yesterday after the Nikkei reported that KKR plans to offer support and lead a restructuring effort in place of the founding Takada family.

The founding family owns nearly 60 per cent of the firm, which was started by Mr Takezo Takada in 1933 as a maker of parachutes and textiles, and is now run by his grandson.

Shares had plunged 65 per cent over the last year, dropping the firm's market capitalisation to 38.1 billion yen (S$477 million).

"The market has been waiting for some sort of positive news for a long time, so it reacted sharply. After all, Takata is a company that has technology and makes important products," said equity strategist Mitsuo Shimizu at Japan Asia Securities Group. "There's a question mark over whether an overseas investment fund will really exert a lot of effort to restructure Takata, because they may just sell it to others."

At least 13 deaths in the United States and Malaysia have been linked to defective Takata airbag inflators that can deploy too forcefully, rupture and spray plastic and metal parts at drivers and passengers.

Carmakers led by Honda Motor had recalled at least 60 million airbags globally before US regulators this month ordered the replacement of as many as 40 million more.

KKR raised US$3.35 billion for its second special-situations fund in April, and the team, run out of the US, provides debt or equity to companies that have distressed capital structures or are undergoing events such as restructuring or mergers.

KKR currently invests in Japanese companies, including in Panasonic Healthcare and Pioneer DJ Corporation. It has also formed a venture with China Orient Asset Management Corp to invest in credit and distressed assets in China.

KKR failed in its bid for Lumileds, the components unit of Royal Philips' lighting division, in March last year.

That sale also included Philips Automotives' lighting business.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on May 27, 2016, with the headline 'Takata shares surge on talk of KKR buyout'. Print Edition | Subscribe