Airbag and seatbelt producer Key Safety Systems Inc. said Tuesday that it has agreed to be acquired by Chinese automotive supplier Ningbo Joyson Electronic Corp. in a deal worth $920 million (6.1 billion yuan).

 

The agreement will create a supplier that generates sales of $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 CEO Jason Luo will continue to lead the company under Joyson. 

 

Key Safety employs 12,000 people worldwide, including 300 in Michigan. Luo said in an email to Crain's Detroit Business, a sister publication of Automotive News China, that the deal will give Key Safety better access to capital.

 

"(Key Safety) management's long-term vision has been to transition (Key Safety) into a public company," Luo said in an 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-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 2014 in a deal reportedly worth $800 million. 

 

Key Safety became the beneficiary last year of airbag production shifts following a massive airbag recall by competitor Takata Corp. Last May, Key Safety announced that it would accelerate production offrontal and side airbag inflators at plants in Florida and China by more than 5 million units annually. 

 

The company generated about $1.4 billion in business with automakers globally in 2014, up from $1.2 billion in 2013, according to the Automotive News list of the top 100 suppliers in North America. 

 

"I have always been intrigued by the safety market and the underlying technology that provides the opportunity to save lives," said Jeff Wang, chairman and founder of Joyson, in a statement. "(Key Safety) has emerged as an industry leader well recognized for its strong global management, innovative technology, high quality worldwide manufacturing presence and diverse customer base." 

 

Chinese acquisitions 

Key Safety is one of several automotive acquisitions by Chinese companies in the past few years. 

 

In September, automotive sealing and anti-vibration component supplier Henniges Automotive Holdings Inc. was acquired by China's AVIC Automotive Systems Holding Co. Ltd. in an estimated $1 billion deal. 

 

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.