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

Impact-resistant window maker buys competitor for $111 million

July 31, 2014 3:07 pm ET

PGT Inc. is acquiring CGI Windows & Doors Holdings Inc. for $111 million as part of a plan to grow strategically by buying businesses with...    More

Buyer plans to sell former Hoover molding, assembly plants

July 31, 2014 2:06 pm ET

A former Hoover manufacturing plant with 150 injection machines in El Paso, Texas, and a nearby maquiladora plant in Juarez, Mexico, changed owners...    More

Private equity firm buys majority share of truck accessory maker

July 31, 2014 10:30 am ET

A majority share of Ann Arbor, Mich.-based truck accessory manufacturer Tectum Holdings Inc. has been acquired by Boston-based private equity firm TA ...    More

Image

Castle Harlan buys landscape erosion control firm Tensar

July 30, 2014 3:46 pm ET

Private equity group Castle Harlan inc. has acquired Atlanta-based Tensar Corp., with plans for the geosynthetic products maker and its subsidiaries...    More

Unipex Group buys Ferguson Chemical Innovation

July 29, 2014 1:57 pm ET

Chemical distributor Unipex Group Inc. announced July 29 that it had purchased Ferguson Chemical Innovation, a Brampton, Ontario-based supplier of che...    More

Market Reports

Pipe, Profile & Tubing Extrusion in North America 2014

U.S. demand for extruded plastics is expected to grow by 3 percent in 2014, with PVC remaining the largest segment.

Plastic pipe will post the strongest gains through 2018, continuing to take market share from competing materials in a range of markets.

Our latest market report provides in-depth analysis of current trends and their financial impact on the pipe, profile and tubing extrusion industry in North America.

Learn more

2014 Injection Molding Industry Report

GROWTH, OPPORTUNITY IN SIGHT FOR INJECTION MOLDERS IN 2014

In the wake of the economic turbulence earlier in this decade, molders today find themselves in much better shape. Molders are gaining a competitive advantage by investing in people, equipment and seeking inroads into new markets on a global scale.

Growth in the injection molding industry is going to be driven by low financing costs and a continued move to reshore some business.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Upcoming Plastics News Events

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

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events