By Taro Fuse and Junko Fujita
TOKYO (Reuters) - Takata Corp (T:7312) is in bailout talks with a number of potential investors including private equity firm KKR & Co (N:KKR), people familiar with the matter said on Thursday, driving up shares in the embattled auto parts maker.
Facing the consequences of the largest-ever U.S. safety recall after its air bag inflators malfunctioned, Takata named an outside committee in February to lead an overhaul. Those advisers said on Wednesday that they had hired investment bank Lazard to counsel on the financial restructuring.
The sources, who cannot be named as they are not authorized to speak to the media, did not detail the stake sought by KKR. One of the sources said the U.S. fund had approached the steering committee.
Earlier, Japan's Nikkei newspaper reported KKR had proposed taking about a 60 percent stake in Takata and submitted a plan.
KKR and Takata declined to comment, but reports of the talks drove up the company's battered shares by its daily limit to trade 21 percent higher, closing at 458 yen.
Selecting a financial sponsor would likely require discussion with Takata's automaker clients and stakeholders. The group, which posted a net loss of 13.1 billion yen ($120 million) for the year ended in March, had been expected to draw-up a shortlist of financial backers by August, and reach a deal the month after.
Industry experts said investors eyeing a stake in Takata would get a knock-down price, but cautioned the company's future was unclear, as it tries to come back from accusations it manipulated air bag test data and dragged its feet in disclosing recall information.
"Takata can raise all the money they need to survive in the short term but unless they restore customer confidence they have no long-term future," said an industry M&A adviser in Tokyo, who declined to be named as he works with Japanese automakers.
Private equity has also had a chequered history in Japan, where companies often throw lifelines to each other rather than rely on outside cash. Takata would be a rare distressed deal.
The company's founding family owns nearly 60 percent of the firm, which was started by Takezo Takada in 1933 as a maker of parachutes and other textiles, and is now run by his grandson.
Earlier this month, the U.S. Transportation Department and Takata confirmed that 17 automakers would recall another 35 million to 40 million air bag inflators by 2019 - on top of 28.8 million recalled previously. Globally, more than 50 million inflators have been recalled so far.
KKR has been building its presence in the Japanese market in past years, inking a $1.7 billion deal in 2013 to buy an 80 percent stake in Panasonic's healthcare unit. It bought Pioneer's DJ and audio equipment unit in 2014.