Automotive airbag and seat belt supplier Key Safety Systems Inc. has agreed to be acquired by Chinese auto conglomerate Ningbo Joyson Electronic Corp. in a $920 million deal.
The agreement, announced Feb. 2, will create a combined supplier generating revenue of approximately $3 billion worldwide, Key Safety said in a news release.
The transaction is expected to close in the first half of this year, pending regulatory approvals.
Key Safety will operate as an independent subsidiary headquartered near Detroit in Sterling Heights, Mich., and its CEO Jason Luo will continue to lead the company under Joyson, the release said.
Joyson also owns injection molder Preh GmbH, a Bad Neustadt, Germany-based company that specializes in interior parts that integrate electronics.
Key Safety employs 12,000 worldwide. It uses plastics in components and housings for both seat belts and airbags.
Luo said in an email to Crain's Detroit Business, a sister publication of Plastics News, that the deal represents the efforts by management to become a public company.
"[Key Safety] management's long-term vision has been to transition into a public company," Luo said in the email. "The access to public funding and increased flexibility to our balance sheet helps to further accelerate our growth plans. The merger with Joyson is the best route to achieve that vision because in addition to the public capital, [Key Safety] immediately gains scale."
Cashing out
The transaction will cash out current investors, including Hong Kong-based private equity firm FountainVest Partners, the Canada Pension Plan Investment Board, New York-based Crestview Partners and Key Safety management.
FountainVest became Key Safety's majority shareholder in August 2014 in a deal reportedly worth $800 million.
Key Safety became the beneficiary last year of airbag production shifts following the largest global airbag recall in the history of the auto industry by competitor Takata Corp. Key Safety announced in May that it would accelerate production of both frontal and side airbag inflators at plants in Florida and China by more than 5 million units annually.
The company generated an estimated $1.4 billion in business with automakers globally in 2014 up from an estimated $1.2 billion in 2013, according to the Automotive News list of the top 100 suppliers in North America.
Key Safety was formed when private equity firm Carlyle Group acquired the bankrupt assets of Lakeland, Fla.-based Breed Technologies Inc. to form Key Safety in 2003. Carlyle sold the company to Crestview Partners and the company's management in 2007.
A ‘connected car' future
The same day Joyson announced the Key Safety Systems acquisition, it also announced it was buying the TechniSat Automotive division of TechniSat Digital GmbH of Daun, Germany.
TechniSat Automotive has 1,200 employees and specializes in software for car infotainment, navigation, vehicle networking and telematics. The company of the software side with Preh's electronic components — including consoles with integrated navigation and entertainment display screens — sets up the company for future connected vehicles, said Jeff Wang, founder and majority shareholder of Joyson in a news release.
“The competencies of Preh and TechniSat Automotive complement each other ideally and open up new mutual business potential,” Wang said. “This creates opportunities for the comprehensive networking of vehicles and brings us a decisive step closer to the Joyson vision of a ‘connected car.'”
