China’s Wanxiang Group to acquire American lithium-ion battery maker A123 Systems

Wanxiang Group Corporation, one of the top 500 companies in China, won at a high-stakes auction held for the assets of lithium-ion battery manufacturer A123 Systems. The company was once a centerpiece of the Obama administration’s loan program for electric vehicles but in October, A123 filed for bankruptcy after continuous losses and a damaging battery recall. Wanxiang, through its American arm Wanxiang America Corp., agreed to pay US$256.6 million for A123’s automotive and commercial operations and three factories in the United States.
The sale does not include A123’s business with the United States government and its military contracts as that portion of the company will be sold to Navitas Systems, a small energy company based in Illinois, for US$2.25 million.
The completion of each deal is subject to certain closing conditions.
A123 received a US$249 million federal grant to spur domestic manufacturing of batteries though some members of the U.S. Congress have opposed Wanxiang’s attempts to buy it. The purchase requires the approval of a United States bankruptcy judge; A123’s bankruptcy became a political issue as the potential sale to a Chinese company has spurred concerns that China will benefit from technologies financed by American taxpayers and developed in the U.S.
Once approved, the deal would expand Wanxiang’s share of the global market for lithium-ion batteries used in new electric cars. The purchase of A123 is the latest in a series of acquisitions made by state-owned and privately held Chinese firms, which have been buying North American energy and manufacturing companies. (December 10, 2012)