Troubled automotive components supplier Takata appears to have a savior on the horizon. According to the latest reports, private equity firm KKR & Co.
is preparing to take control of the Japanese manufacturer as it attempts to restructure, raise capital, and come out the other end of the airbag recall debacle.
Formerly known as Kohlberg Kravis Roberts & Co, New York-based KKR specializes in leveraged buyouts. KRR has previously completed takeovers of numerous large companies, including RJB Nabisco, Toys R Us, and Dollar General, however it's relatively new to the automotive sector. Takata retained the financial services of Lazard Ltd. in order to attract the investment as part of a massive restructuring plan.
Part of the plan may involve negotiating with automakers to help shoulder the enormous costs involved with replacing tens of millions of faulty airbags. The many carmakers that use Takata's airbags will inevitably be resistant to picking up the tab – or relinquishing claims for reimbursement on the airbags they have already purchased in order to carry out the recalls. Footing part of the bill may be vital in preventing Takata from entering bankruptcy, thereby eliminating a vital supplier on which many automakers rely for safety equipment like seatbelts.
Takata has been saddled with billions in recall costs and hundreds of millions of dollars in fines and legal settlements. Its stock has dropped to less than half its value so far this year, but began to climb again as news of the KKR deal surfaced.