Wanxiang Group gets OK to acquire assets of A123 Systems

By Dustin Walsh
CRAIN'S DETROIT BUSINESS

Published: January 29, 2013 3:27 pm ET
Updated: January 29, 2013 3:29 pm ET

Related to this story

Topics Mergers & Acquisitions, Automotive
Companies & Associations Johnson Controls Inc.

WILMINGTON, DEL. -- China's Wanxiang Group Corp. won U.S. government approval Tuesday to acquire the assets of A123 Systems Inc., including its plants in Livonia and Romulus, Mich., confirmed Wanxiang America President Pin Ni.

A U.S. Bankruptcy Court judge approved the sale of A123 at a Dec. 11 hearing in Wilmington, Del., after Wanxiang beat out a joint bid from Glendale, Wis.-based Johnson Controls Inc. and Tokyo-based NEC Corp. Wanxiang won with a $256.6 million bid.

However, China's largest auto supplier faces strong opposition from Congress in acquiring the Waltham, Mass.-based lithium-ion battery maker because of alleged national security and intellectual property issues. One of those opponents is U.S. Sen. Debbie Stabenow, a Michigan Democrat.

The politicians' concern with the deal involves the Chinese company's control over a government-funded company.

The U.S. Department of Energy has funded $132 million of a $249.1 million federal grant to A123 since 2009. The government has said it has a lien on the property and equipment at A123's Livonia and Romulus plants.

The U.S. Treasury Department's Committee for Foreign Investment in the U.S. approved the acquisition of A123's assets after months of convincing from Wanxiang and A123, Ni said.

"Both sides worked very hard, and I believe our lawyers are working very, very hard on getting the deal closed," Ni said in a phone interview.

The deal could close as early as Thursday.

Ni said A123 will retain its name and remain an independent private company under Wanxiang.

The Chinese supplier was unable to secure approval from the Committee on Foreign Investment in the U.S. on a $465 million pre-bankruptcy agreement to buy 80 percent of A123, forcing an insolvent A123 into bankruptcy in October.

A123 entered bankruptcy with JCI as a stalking-horse bidder before being outbid by Wanxiang in a December auction.

JCI fought against the Wanxiang bid in Washington, D.C., and didn't think the Chinese company would get government approval.

"It seems to me if Wanxiang was going to get government approval, it would have happened before bankruptcy so no one had to go through this mess," Alex Molinaroli, president of JCI's power solutions business unit, told Crain's in an interview Dec. 10. "They are spending money on assets they don't know if they can keep. And if that happens, that's where someone like us comes in."

However, Ni said employment at the plants in Livonia and Romulus will remain strong. It is unclear how many people the plants employ, but they have employed as many as 1,000.

Wanxiang agreed to lend A123 $50 million in November to keep it operating through bankruptcy.

"We've already committed significant funding to the operation, and, obviously, we want to see improvement," Ni said in a December interview. North America "is our home," he said. "We have nowhere to go, and we have a customer base to serve here, and we don't have other (battery) operations to consolidate into."

As part of the deal, Wanxiang bought A123's cathode powder plant in China and its share of a joint venture with Shanghai Automotive Industry Corp. called Shanghai Advanced Traction Battery Systems Co.


Comments

Wanxiang Group gets OK to acquire assets of A123 Systems

By Dustin Walsh
CRAIN'S DETROIT BUSINESS

Published: January 29, 2013 3:27 pm ET
Updated: January 29, 2013 3:29 pm ET

Post Your Comments


Back to story


More stories

Quality Vision buys ShapeGrabber

April 23, 2014 10:19 am ET

Quality Vision International Inc. of Rochester, N.Y., has purchased ShapeGrabber Inc., a maker of automated three-dimensional scanners, in a deal...    More

Image

Pregis Corp. to get new owner

April 22, 2014 11:44 am ET

The private equity owner of Pregis Corp. is selling off its North American operations for an undisclosed sum.    More

Auto supplier adds production space, jobs at plant in central Hungary

April 22, 2014 9:50 am ET

Automotive parts manufacturer Ábrahám Kft. has expanded its factory in Túrkéve, in central Hungary, with the launch of a new production hall as part...    More

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

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