Takata Corp shares rose by the daily limit after the Wall Street Journal reported the company is nearing a settlement with the US Department of Justice to resolve allegations of criminal wrongdoing related to its faulty air bags.
Such an agreement may include pleading guilty to criminal misconduct and penalties of as much as US$1 billion, the newspaper reported, citing people familiar with the matter.
A settlement could be reached by next month, it said.
The stock jumped 16 percent to ￥707 at the close in Tokyo, the highest since Jan. 19. Takata was not the source of the report on the settlement and nothing has been decided, the company said yesterday in a statement. The justice department declined to comment.
“A settlement fee of a maximum US$1 billion is not an impossible amount for Takata to handle,” said Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co in Tokyo. “Especially if the company doesn’t have to pay it all at once but over a few years, investors are thinking Takata could actually make it through this somehow.”
A settlement may facilitate a takeover, as Takata faces a cascade of compensation and penalties costs at the same time it is working to find a buyer and complete its restructuring. Takata and its financial adviser, Lazard Ltd, have asked prospective buyers to complete the due diligence in February, people familiar with the matter said earlier this month.
The acquirer will potentially be on the hook for recall costs and liability payments while having to ensure a stable supply of replacement parts to automakers. Regulators have ordered recalls scheduled through at least 2019 that could eventually exceed 100 million air bags used by more than a dozen automakers.
The air-bag maker is leaning toward bids from Autoliv Inc and Key Safety Systems Inc, people familiar with the matter have said.
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