Key Safety Systems, a Michigan-based supplier of safety components for manufacturers, has agreed to purchase maligned Japanese airbag manufacturer Takata for $1.6 billion, The Associated Press reported Tuesday.
Takata’s ongoing airbag recall scandal forced the company into bankruptcy earlier this year. Tens of millions of vehicles were recalled after its ammonium nitrate airbag inflators were deemed at risk for a malfunction that could result in the projection of shrapnel toward occupants during a crash.
Under the deal KSS will “acquire substantially all of Takata’s global assets,” according to the report, but will not take on elements of Takata related to airbag inflator manufacturing, which will cease operations once it is no longer required to produce replacements for the recall.
A substantial portion of the purchase price will be used to cover a $1 billion penalty stemming from a criminal fraud case in relation to the defective airbags. The penalty, which will largely go toward compensating automakers and victims of the faulty components, does not include the tens of billions in potential liability that Takata faces in pending litigation.
“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,” KSS President Yuxin Tang said in a statement.
Pending bankruptcy court approval in both Japan and the United States, the deal will close in early 2018. KSS and Takata will become one operation that will employ over 60,000 people, and result in combined annual sales of $7 billion.