Chinese auto parts manufacturer Wanxiang Group agreed to purchase battery maker A123 Systems for $256.6 million Sunday, pending approval from U.S. bankruptcy court and the federal government. A123 makes lithium ion batteries and storage systems for the utility and transportation sectors.
The deal ends an ownership roller coaster for the Waltham, Massachusetts-based A123 that began in August, when Wanxiang had agreed to take an 80 percent stake in the troubled company.
That investment deal fell apart “as a result of unanticipated and significant challenges to its completion,” A123 CEO David Vieau said in a statement at the time. A few weeks later, A123 filed for bankruptcy, and battery giant Johnson Controls stepped in with an offer to buy. (See related story: “Battery Maker A123’s Bankruptcy Underscores Hurdles for Clean Tech“) But Wanxiang ultimately outbid Johnson Controls and two other companies, saying the deal would help Wanxiang grow its U.S.-based subsidiary. “We are committed to making the long-term investments necessary for A123 to be successful,” said Pin Ni, president of Wanxiang America.
Critics of Wanxiang’s investment in A123 have pointed to concerns about job loss and national security. “This is the latest in a seemingly continuous cascade of predictable, super-sized clean-tech commercialization failures, which unfortunately hemorrhages our critical national technology and intellectual property advantages to the Chinese and other economic competitors,” said Andy Karsner, former assistant energy secretary under the Bush administration, in The Washington Post.
But Wanxiang and A123 told The Washington Post that Wanxiang would be keeping A123’s American operations running and would not move those jobs overseas. A123 has about 1,000 employees in the United States.
The agreed-upon price of $256.6 milion for A123 is just about the same as the amount of government grant money that the company had secured over the last few years. (See: “A123 Bankruptcy by the Numbers“) The purchase deal does not, however, include A123’s contracts with U.S. government, including military contracts. Those are being acquired by Woodridge, Illinois-based Navitas Systems for $2.25 million.
The A123 deal is part of a tide of Chinese investment in North American energy companies. On Friday, Canada approved the $15.1 billion purchase of oil and gas producer Nexen by China’s state-owned CNOOC. (See related blog post: “Snapshot: Chinese Investment in North American Energy in 2012“)