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 Automotive, Mergers & Acquisitions
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

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...    More

Image

Magna expanding interiors site in Slovakia

July 29, 2014 1:47 pm ET

Magna International Inc. plans to nearly double the size of its manufacturing facility in Trnava, in western Slovakia, to accommodate new automotive...    More

Image

Universal Polymer beefing up capabilities through acquisition

July 29, 2014 12:04 pm ET

Universal Polymer & Rubber Ltd. is growing again and adding to its capabilities, this time via another acquisition and a plant expansion.    More

Image

Reynolds considering sale of Closure Systems International unit

July 29, 2014 10:32 am ET

Packaging giant Reynolds Group Holdings Ltd. has put its closures business under review.    More

Image

Carbon black supplier Orion begins trading on NYSE

July 29, 2014 11:29 am ET

Orion Engineered Carbons S.a.r.l. has priced the initial public offering of 19.5 million common shares at a price to the public of $18 per share.    More

Market Reports

Plastics Recyclers Data Report & Directory

This exclusive MS Excel database contains all the companies from Plastics News' ranking of top North American Recyclers and Brokers by reprocessed volume and also includes a directory with materials processes, services offered and company contact information. Data is based on primary research by PN editorial staff.

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