JCI to buy A123 battery business

Dustin Walsh

Published: October 17, 2012 6:00 am ET

Related to this story

Topics Mergers & Acquisitions, Automotive

GLENDALE, WIS. (Oct. 17, 5:40 a.m. ET) — Lithium-ion battery maker A123 Systems Inc. filed for Chapter 11 bankruptcy protection today in U.S. Bankruptcy Court in Delaware and said Johnson Controls Inc. has agreed to acquire its automotive battery business for $125 million.

To facilitate the purchase, JCI will provide A123 $72.5 million to continue operations through the bankruptcy process. Under the deal, the Waltham, Mass-based A123 will pay to license its own grid, commercial and government technologies from JCI.

JCI will acquire A123's plants in Livonia and Romulus, Mich., which employ roughly 700, as part of the deal. It's unclear what will happen with those positions. Glendale-based Johnson Controls already operates a lithium-ion plant in Holland, Mich.

JCI also will also acquire A123's cathode powder plant in China and its stake in Shanghai Advanced Traction Battery Systems Co., a joint venture with Shanghai Automotive.

In the Chapter 11 filing, A123 said it owes millions to hundreds of debtors, including the cities of Livonia, Novi and Romulus. A123 holds $376 million in debts with about $459.8 million in assets. Its largest debtor is U.S. Bank, which A123 owes $142.8 million.

"We believe the asset purchase agreement with Johnson Controls, coupled with a Chapter 11 filing, is in the best interests of A123 and its stakeholders at this time," A123 CEO David Vieau said in the statement.

"As we move through this transaction process, we expect to continue operating and working with customers and suppliers," he added.

The filing comes one day after A123 filed a document with the U.S. Securities and Exchange Commission stating that it would default today on payment for $143.8 million of notes that expire in 2016.

"The company may not have sufficient cash to fund operations and may need to seek the protections provided under the U.S. Bankruptcy Code," A123 said in the filing. "No assurance can be given that the company will be able to avoid restructuring, reorganization, or a bankruptcy filing."

A123 received a $249.1 million federal grant in 2009 to build its Livonia plant but has struggled since, posting 14 straight quarterly losses.

Richard Kwas, senior analyst for Well Fargo Securities LLC, said in an analyst note: "In our view, the transaction makes sense for JCI, as it will broaden the company's lithium-ion technology offering and enhances its scale. Longer term, the transaction should further solidify JCI's position in advanced batteries."


Comments

JCI to buy A123 battery business

Dustin Walsh

Published: October 17, 2012 6:00 am ET

Post Your Comments


Back to story


More stories

Image

Ascend targets nylon for auto applications, opening propylene monomer unit in Texas

April 18, 2014 10:57 am ET

Materials firm Ascend Performance Materials Inc. is in full operation at its new nylon 6/6 compounding line in Florida and will break ground by the...    More

PolyQuest spins off FiberQuest unit

April 18, 2014 10:14 am ET

PolyQuest Inc. has spun off its FiberQuest unit — which distributes polyester staple fibers and cotton — as a separate company.    More

Spain's Cristian Lay Group buys two materials units of bankrupt LSB

April 17, 2014 11:11 am ET

Spanish industrial conglomerate Cristian Lay Group has purchased two of the bankrupt Spanish PET packaging group La Seda de Barcelona.    More

MGS buying N.Y. medical molding plant from Hospira

April 17, 2014 10:19 pm ET

MGS Manufacturing Group is purchasing the Buffalo, N.Y., injection molding facility and related product line of Hospira Inc., effective July 1. Terms ...    More

Image

Navigating the rough seas of selling your company

April 17, 2014 2:47 pm ET

For family owned plastics firms who survived the Great Recession, many wonder: Is it time to sell, retire and sip cocktails on the beach? Or, maybe fi...    More

Market Reports

Thermoformed Packaging 2014 Market Review & Outlook North America

This in-depth report provides analysis and discussions of economic and political conditions, market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as strategies being implemented by thermoformed packaging companies. In addition, there are reviews of 25 leading thermoformers in the packaging segment, assessing their growth initiatives and performance metrics over 10 years.

Learn more

Automotive Market Review and Outlook 2014 The Americas

This 75-page report features in-depth analysis of the automotive industry for the Americas. It includes discussions of market trends, legislative/regulatory activity impacting production and threats as well as design strategies being implemented by the major automakers. Detailed charts and data tables outline North American automotive production over the last five years.

Learn more

Plastics Building & Construction Market Review and Outlook 2014 with MS Excel chart data

This report provides in-depth analysis of the plastic building and construction market for North America, including discussions of trends, opportunities, threats and the latest developments in construction trends that impact plastics processors.

Learn more

Upcoming Plastics News Events

May 6, 2014 - May 8, 2014Plastics in Medical Devices 2014

May 12, 2014 - May 12, 2014Plastics News Brazil Pharma Summit

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

February 3, 2015 - February 7, 2015Plastics News Executive Forum 2015

More Events