UPDATE 1-Key Safety Systems completes deal to acquire air bag maker Takata

* Group led by parent Ningbo Joyson Electronic Corp provided funds

* Combined company to be renamed Joyson Safety Systems

* Deal excludes Takata operations related to faulty inflators (Adds details on deal, background on Takata, changes media slug)

TOKYO, April 12 (Reuters) - Auto components maker Key Safety Systems on Wednesday completed its $1.6 billion deal to acquire air-bag maker Takata Corp, whose inflators triggered the auto industry's biggest recall and have been linked to at least 22 deaths around the world.

After more than a decade of recalls, lawsuits and a criminal investigation which drove Takata to bankruptcy, the deal ensures the Japanese company will be able to continue producing replacement inflators before winding itself down, which may take years.

The combined companies would be renamed Joyson Safety Systems, after a consortium led by KSS's Chinese parent company, Ningbo Joyson Electronic Corporation, provided funding to acquire most of Takata's operations, Joyson Safety Systems said in a statement. The new company will be based in Michigan.

Takata was once the world's No. 3 air-bag maker and also produced seat belts, steering wheel systems and child seats.

The acquisition will provide Joyson Safety Systems with additional manufacturing scale to compete with auto safety industry leaders Autoliv Inc and ZF TRW.

It excludes Takata's liabilities related to its faulty inflators, and leaves the Japanese company, restructured as part of U.S. and Japanese bankruptcy proceedings, responsible for those operations.

Takata air-bag inflators contained a chemical compound which could explode with excessive force, spraying shrapnel into vehicle compartments.

The company has struggled to churn out replacement parts after a global recall of tens of millions of inflators.

A U.S. court in February approved Takata's Chapter 11 bankruptcy filing, under which the company's U.S. subsidiary agreed to set up a victims compensation fund and repay automaker creditors only a tiny portion of its unsecured claims.

Court documents related to the parent company's Japanese bankruptcy proceedings show that carmakers, which have been footing the bill for years of recalls, are likely to also forgo the vast majority of their unsecured claims against the company, according to court documents seen by Reuters. (Reporting by Yashaswini Swamynathan in Bengaluru and Naomi Tajitsu in Tokyo; Editing by Stephen Coates)