Report: Autoliv Now Seen as Favored Suitor for Takata

Sweden’s Autoliv Inc. has emerged as the most likely buyer for embattled airbag supplier Takata Corp.

Sources tell the Wall Street Journal that Takata’s carmaker customers favor Autoliv because of its manufacturing expertise and ability to achieve a smooth takeover that won’t disrupt production.

Takata has been shopping for a financial savior for months. The company has been driven to near ruin by recalls involving more than a dozen carmakers and some 100 million explosion-prone Takata airbag inflators. The devices have been blamed for more than a dozen fatalities and 130 injuries. The total recall cost has been estimated at $12 billion.

Would-be bidders presented their proposals to a Takata steering committee last month. The leading contender appeared to be a plan by Japanese airbag inflator maker Daicel Corp., and private equity firm Bain Capital. The partners offered more cash—about $3.4 billion—than other proposals. But the Daicel-Bain deal involves a partial initial payment, with the balance to come after Takata's profits revive. The bid also proposes that both Takata and its U.S. affiliate undergo bankruptcy.

The Journal’s sources say the committee now favors Autoliv because the company’s superior production knowhow, presumably including the ability to fix manufacturing flaws that generated much of Takata’s woes.

Autoliv's bid also proposes a bankruptcy filing only for Takata's U.S. unit, which would avoid creating credit problems for Takata's suppliers in Japan, the Journal’s sources say.