FRANKFURT — Key Safety Systems is poised to finalize its $1.59 billion acquisition of Takata Corp.'s assets within a couple of weeks, and none too soon. Its Swedish rival Autoliv Inc. has been snapping up Takata's customers.
Autoliv says it is winning 55 percent of new airbag contracts that it bids on so far this year, up from 50 percent two years ago. That win rate will pad the company's already-sizable market share. By 2020, Autoliv expects to have a 45 percent or higher share of global airbag and seat belt sales — up from 39 percent in 2016.
Last month in Frankfurt, Autoliv CEO Jan Carlson told Automotive News that the sale of the troubled Japanese airbag giant to Key Safety — a resolution to a problem that has worried Takata customers for some time — has not slowed Autoliv's market share growth.
"I can't speculate what customers think, but it is a difficult situation," Carlson said. "Takata is a big company, and Key Safety is a smaller company, and they have to integrate."
Last week, Reuters reported that Key Safety is expected to wrap up details of the acquisition in mid-October, with the deal scheduled to close early next year. Takata ranks No. 43 on the Automotive News list of the top 100 global suppliers, with an estimated $5.91 billion in automotive parts sales in its 2016 fiscal year. Autoliv is No. 23, with $10.07 billion in 2016 sales.
To be sure, Autoliv is winning business at the expense of Takata rather than Key Safety's own in-house airbag division, which expects to double inflator production to 60 million units by 2020.
Key Safety executives are eager to acquire Takata's healthy seat belt business, which has not been affected by the global airbag recall.
Takata's airbag business is another story. Takata's ammonium nitrate inflators can explode if exposed to heat and humidity for long periods, and they have been linked to the deaths of 16 motorists worldwide.
Takata is producing replacement inflators for its recalled airbags. But its inflator division, which is not part of the Key Safety acquisition, will wind down most operations as the recall is completed.
Autoliv, ZF and Daicel — Takata's three biggest rivals — also are producing replacement inflators for Takata customers, and each is angling to win future contracts with those automakers.
The biggest prize is Honda Motor Co., Takata's largest customer. In 2015, Honda said it would not grant Takata any future inflator contracts. Key Safety has assured Honda and other customers that the acquisition won't disrupt the flow of parts.
But Takata's imminent demise has presented Autoliv with an opportunity to expand in Japan. Autoliv has a dominant position in Europe and North America, but Japan accounts for just 9 percent of the company's global sales.
While Autoliv courts Takata's customers, Key Safety must find a new CEO to replace Jason Luo, who departed in August to run Ford of China.
Key Safety board director Yuxin Tang was named interim president, and Ningbo Joyson, the Chinese supplier that owns Key Safety, may name a permanent replacement by the end of the year.