China's role in the global automotive supply chain took on a higher profile on Monday after Key Safety Systems acquired troubled airbag maker Takata Corp for about $1.6 billion as part of a pre-packaged bankruptcy in the US and Japan.

Key Safety Systems (KSS), based in the Detroit suburb of Sterling Heights, Michigan, is the fourth-largest airbag manufacturer in the world and a subsidiary of China's Ningbo Joyson Electronic Corp.

By combining substantially all of Takata with Key Safety, the transaction would form a global auto safety supplier with approximately 60,000 employees in 23 countries.

Japan-based Takata is in the midst of a massive recall that may affect as many as 100 million vehicles worldwide after faulty Takata airbag inflators exploded and were linked to at least 16 deaths globally and more than 100 injuries.

In the biggest bankruptcy of a Japanese manufacturer, Takata faces tens of billions of dollars in costs and liabilities resulting from almost a decade of recalls and lawsuits. Some of the proceeds from the sale will be used to settle a plea agreement with the US Department of Justice.

Key said it plans to keep all Takata employees and maintain operations in Japan, including the opening of a new Asian regional headquarters in the country. Jason Luo, president and CEO of Key Safety, said a combined company will bolster KSS's role in the global auto industry.

"Takata has a dedicated work force and a particularly strong seat belt portfolio, which was historically Takata's entry point into the safety market.

"It also has regional strength in Japan, Brazil and other countries that will enhance the KSS global footprint," he wrote in an email.

China's Ningbo Joyson may be looking to build on its 2016 acquisition of KSS for $920 million. Sanjay Gupta, dean of the Eli Broad College of Business at Michigan State University, told China Daily earlier this year that Joyson would be interested in Takata to leverage the lessons learned from its purchase of Key.

"As we venture deeper into automation, safety will play an even bigger role, and so airbags and other safety products are likely to receive more attention," Gupta said.

"Fixing Takata's problems and getting the products right would enable Joyson to have a commanding position in an area of potentially high demand and growth in the future."

Terms of the deal call for Key Safety to acquire Takata assets and operations except those tied to the phase-stabilized ammonium nitrate airbag inflators business. Takata said it plans to wind down those plants.

paulwelitzkin@chinadailyusa.com