Key Safety Systems CEO Jason Luo is resigning as the supplier inches closer to finalizing a $1.59 billion deal to acquire the embattled Japanese airbag supplier Takata.
The longtime head of the supplier is leaving for a job at an unidentified customer in China on Aug. 31, Jeff Wang, chairman of Key Safety’s parent company Ningbo Joyson Electronics, said in an internal memo sent to employees Wednesday morning.
Wang also announced he will now serve as executive chairman of Key Safety and board director Yuxin Tang will assume the role of interim president.
The memo indicated an announcement is forthcoming from Luo’s new employer, and that personal family matters in China that require his attention triggered the move.
The supplier is already searching for Luo’s permanent replacement; internal and external candidates will be considered, the memo said.
Luo was not immediately available for comment.
Still on track
Despite the loss of its top executive, the company remains on track to finalize the deal to acquire Takata and is expected to sign a formal agreement in the coming weeks, Ron Feldeisen, senior vice president of global sales and marketing, confirmed in an email. He would not directly comment on Luo’s departure.
Luo served as a X-factor in the bid to win Takata, according to Crain’s Detroit Business, an affiliate of Automotive News. Luo's family hails from Manchuria, a region in northeast China controlled by the Japanese until the end of World War II. His father spoke Japanese and worked on the Japan-owned South Manchuria Railway.
"I understand a lot about Japan," Luo said previously. "I can speak to the food, the culture, the way they do business. To make a deal, you have to communicate and understand how (the other side) is thinking. This shortened the distance between us. The cultural gap was almost not there."
Takata’s malfunctioning airbag inflators, which have sent shards of metal into drivers and passengers and are linked to at least 17 deaths globally, have plagued it for more than eight years.
With pressure mounting, the 84-year old Takata filed for bankruptcy protection in Japan and its U.S. subsidiary, Auburn Hills-based TK Holdings Inc., filed for Chapter 11 protection in Delaware on June 25 in a prepackaged agreement to sell to Key Safety, which beat out nearly a half dozen competitors.
Under the deal, Key Safety's management vows to maintain Takata's 45,000-person employment base, with the exception of its problematic ammonium nitrate airbag inflator business, which is expected to end operation after the sale.
The acquisition will make Key Safety one of the largest players in the safety market, with more than 60,000 employees in 23 countries and more than $7 billion in revenue.
While Takata's airbag inflator market share has plummeted -- analysts project it to drop to 5 percent in 2020 from 22 percent in 2015 -- competitors Autoliv, Daicel, ZF TRW and Key Safety have picked up the slack. Key Safety plans to boost inflator production by more than 30 million units to about 60 million by 2020. That may grow with the addition of Takata.
But it was never Takata's airbag business that Key Safety lusted after. It was seat belts -- which accounted for 33.5 percent of Takata's revenue in 2016.