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Wanxiang beats JCI for A123 assets

Keywords: Tags  A123 Systems, Wanxiang America, Dave Vieau, Johnson Controls, Power Solutions, Alex Molinaroli, automotive batteries, Daniel Fitzgerald


NEW YORK — Wanxiang America Corp. will acquire nearly all the assets of battery manufacturer A123 Systems Inc. for $256.6 million, with Johnson Controls Inc. (JCI) declining to match Wanxiang’s bid.

The deal includes A123’s automotive, grid and commercial business assets, including all technology, products, customer contracts and U.S. facilities in Michigan, Massachusetts and Missouri; its cathode powder manufacturing operations in China; and its equity interest in Shanghai Advanced Traction Battery Systems Co., A123’s joint venture with Shanghai Automotive, Waltham, Mass.-based A123 said in a statement Sunday.

Woodridge, Ill.-based Navitas Systems LLC has agreed to acquire A123’s government business, including all U.S. military contracts, for $2.25 million, A123 said.

The deal was reached following an auction conducted under the supervision of the U.S. Bankruptcy Court in Delaware.

A123 chief executive officer Dave Vieau said the deal was structured “to address potential national security concerns expressed during the review of our previous investment agreement with Wanxiang announced in August as well as to address concerns raised by the Department of Energy.”

“We believe this transaction balances those risks with A123’s obligation to act in the best interest of our creditors,” Vieau said.
Last month, the Strategic Materials Advisory Council warned that a sale to Wanxiang “would make the U.S. dependent on an unreliable foreign source for yet another critical defense component” ( amm.com, Nov. 28). Chicago-based Wanxiang America is a subsidiary of China-based Wanxiang Group.

JCI said in a statement Sunday that it officially withdrew its bid for A123’s automotive assets after refusing to match Wanxiang’s bid.

“While A123’s automotive and government assets were complementary to Johnson Controls’ portfolio and aligned with our long-term goals, Wanxiang’s offer was beyond the value of those assets to Johnson Controls,” said Johnson Controls Power Solutions president Alex Molinaroli. “Reports by other parties that our proposal involved an elimination of jobs in Michigan are inaccurate.”

Milwaukee-based JCI had originally tendered a $125-million offer to acquire the automotive assets of A123 after the latter company filed for Chapter 11 bankruptcy protection in October ( amm.com, Oct. 18).

A123 and Wanxiang will seek court approval of the sale at a hearing Tuesday. The deal must also be approved by the Committee on Foreign Investment in the United States.
Daniel Fitzgerald

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