The transaction was awaiting approval by the Committee on Foreign Investment in the United States, led by the US Treasury secretary. The committee approved the deal on Monday night, Wanxiang said. "Wanxiang America looks forward to closing the transaction and to continuing to foster the technologies A123 has worked so hard to develop," Pin Ni, the president of Wanxiang America, said in a statement.
The big question now is whether approval will end debate over whether the acquisition will transfer sensitive technology developed with US Department of Energy funding to a Chinese company. Last month, Wanxiang beat out US rival Johnson Controls Inc. in its bid for A123 Systems.
Some members of Congress said selling A123 to Wanxiang could jeopardize US energy security, and they asked the US committee to block it. Wanxiang worked on blunting the criticism, in part by excluding A123's defense contracts from its auction bid. Those were sold separately to Illinois-based Navitas Systems for $2.25 million.
Some members of Congress said selling A123 to Wanxiang could jeopardize US energy security.
The sale had been approved by the US Bankruptcy Court. On January 18, A123 said it expected the deal to close by February 1, this coming Friday. A123 Systems declined to comment to Reuters on the US government approval.
Wanxiang's history of investing in the US market may have alleviated some of the Committee on Foreign Investment in the United States' concerns about the foreign company. Wanxiang makes about $1 billion a year in US revenue supplying parts to General Motors and Ford. According to a Congressional report, the Chinese company has bought or invested in more than 20 US companies, many of which were in bankruptcy.
A123 Systems had received a $249-million federal grant, although about half of that money was never released. The money raised at auction will be used to repay A123's debts of about $376 million.
The battery maker's customers have included Fisker Automotive, BMW (for the hybrid 3 and 5 Series cars), General Motors (all-electric Chevrolet Spark), China's SAIC and India's Tata Motors.
Waltham, Mass.--January 29, 2013--A123 Systems LLC, a newly formed, wholly owned subsidiary of Wanxiang America Corporation, today announced that it has acquired substantially all of the non-government business assets of A123 Systems, Inc. Included in the acquisition, which has received approval from the Committee on Foreign Investment in the United States (CFIUS), are A123's automotive, grid and commercial business assets, including technology, products, customer contracts and U.S. facilities in Michigan, Massachusetts and Missouri; its manufacturing operations in China; and its equity interest in Shanghai Advanced Traction Battery Systems Co., A123's joint venture with Shanghai Automotive. Excluded from the acquisition is A123's Ann Arbor, Mich.-based government business, including contracts with the U.S. military.
"We are excited to add A123 Systems to our growing portfolio of companies as we continue to expand on our strategy of investing in the automotive and cleantech industries in the U.S.," said Pin Ni, president of Wanxiang America. "A123 will continue to offer cutting-edge technology for vehicle electrification and grid-scale energy storage, strong manufacturing and systems engineering capabilities and a world-class R&D team. Wanxiang America will continue to foster the technologies A123 has worked so hard to develop, and we believe this combination positions A123 for long-term success. We'd also like to thank Dave Vieau for his years of dedication and service to A123."
A123 Systems LLC will leverage its industry-leading research and development capability to bring innovations at the chemistry, cell and system level to market while also ramping up manufacturing at its facilities in Michigan and Massachusetts to meet demand from customers in three core business areas: transportation, electric grid and lead-acid replacement. In addition, A123 will continue operating its existing manufacturing facilities in China.
-Transportation-In addition to its market leading position in commercial vehicles and its strong global presence in passenger car high-voltage systems, A123 Systems LLC will capitalize on the increasing market opportunity for its technology in low-voltage applications, including start-stop microhybrid battery systems. The company is also committed to continue executing on previously announced customer agreements introducing next-generation vehicles to market, including the ActiveHybrid 3 and ActiveHybrid 5 HEVs from BMW, the Chevrolet Spark EV from General Motors, and the Roewe 550 plug-in HEV and Roewe E50 EV from Shanghai Automotive, China's largest automaker.
-Electric Grid-A123 Systems LLC will continue to focus on its mission to enable the transformation of energy production and delivery through its energy storage solutions and services that are designed to significantly improve the operational reliability, economic viability and efficiency of electric power grids.
-Lead-Acid Replacement-A123 Systems LLC will continue to service key strategic customers by supplying lithium ion battery solutions designed to deliver higher performance, longer life and lower total cost of ownership as compared with traditional battery chemistries for industrial, commercial and consumer applications.
About A123 Systems LLC
A123 Systems LLC, a wholly owned subsidiary of Wanxiang America Corporation, is a leading developer and manufacturer of advanced lithium-ion batteries and energy storage systems for transportation, electric grid and lead-acid replacement applications. The company's proprietary Nanophosphate® lithium iron phosphate technology is built on novel nanoscale materials initially developed at the Massachusetts Institute of Technology and is designed to deliver high power and energy density, increased safety and extended life. A123 leverages breakthrough technology and expert systems integration capabilities to deliver innovative solutions that enable customers to bring next-generation products to market. For more information, please visit www.a123systems.com.
About Wanxiang America Corporation
Based outside of Chicago, Wanxiang America has been in the automotive, industrial and clean energy technology markets in the U.S. since 1994 and has a long and successful record of investing in and expanding U.S. manufacturing operations. Wanxiang America currently has more than 3,000 employees in the U.S.