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Takata Corp. And KSS Sign Definitive Asset Purchase Agreement

KSS will acquire substantially all of Takata’s global assets and operations for an aggregate purchase price of $1.588 billion.

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Takata Corp. today has signed a definitive asset purchase agreement with Key Safety Systems (KSS), a global leader in mobility safety, headquartered in Sterling Heights, Michigan, under which KSS will acquire substantially all of Takata’s global assets and operations for an aggregate purchase price of $1.588 billion (approximately ¥175 billion).

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The definitive asset purchase agreement is consistent with the agreement in principle announced by KSS and Takata on June 26. Specifically, under the agreement, KSS will acquire substantially all of Takata’s assets, except for certain 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 a reorganized Takata following the transaction closing and eventually will be wound down. Takata will continue to produce airbag inflator replacements to meet demands without interruption.

Shigehisa Takada, chairman and CEO of Takata, said, “We are very pleased to have reached this agreement with KSS, which is an important step toward the consummation of our sale and achieving the objectives we identified at the outset of this process. Our top priorities continue to be providing a steady supply of products to our valued customers, including replacement parts for recalls, and a stable home for our exceptional employees. We believe that the combined business will be well-positioned for long-term success in the global automotive industry.”

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Yuxin Tang, president of KSS, said, “The acquisition of Takata fits perfectly with KSS’s century-long commitment to the automotive business. 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. We look forward to completing the transaction and advancing the next phase of growth for the new combined company.”

Takata has filed final forms of all definitive transaction documents in the U.S., including its Chapter 11 plan in the U.S., as well as certain restructuring support agreements pursuant to which Takata, KSS and a significant group of Takata’s OEM customers have 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.

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

Takata continues to work through proceedings under the Civil Rehabilitation Act in Japan and the Chapter 11 process in the U.S., under which the sale transaction is expected to be completed in the first quarter of 2018. At the same time, Takata EMEA (Europe, Middle East and Africa) maintains their financial independence and continues to operate on a financially solid basis without planning to file for insolvency proceedings.

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

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

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