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December 9, 2012 10:54 pm
Chinese bid wins auction for A123
A Chinese car parts maker has won the auction for bankrupt US battery maker A123 Systems, in a further success in international dealmaking for Chinese groups.
Wanxiang Group bid about $257m to win the auction for the battery maker, which supplies electric cars. The sale still requires the approval of the Delaware court where A123 filed for bankruptcy.
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The US group will formally submit the bid to the court for approval on Tuesday. The sale will also require the approval of the US Committee on Foreign Investment.
In an effort to ease political approval, Wanxiang will not be taking over A123’s defence business, which will be sold to Illinois-based Navitas for $2.25m.
“We think we have structured this transaction to address potential national security concerns expressed during the review of our previous investment agreement with Wanxiang announced in August, as well as to address concerns raised by the Department of Energy,” said Dave Vieau, chief executive of A123.
Wanxiang beat a joint bid by Johnson Controls of Milwaukee and Japan’s NEC. Its victory comes after Cnooc, the Beijing backed oil group, on Friday secured Canadian approval for its $18bn bid for Nexen, the biggest Chinese M&A deal on record.
China M&A in the year to December 7 reached $145bn, a record for any year to this point, according to Thomson Reuters.
In October, A123 – which was awarded a $249m grant from the US government – became the latest stimulus-backed company to file for bankruptcy, prompting a fresh round of attacks on President Barack Obama’s support for emerging energy technologies.
The company said it was seeking Chapter 11 bankruptcy protection “to provide for an orderly sale” of its operations and “help maximise the value of its assets for its stakeholders”.
The company had attempted to secure a rescue deal with Wanxiang before it went into administration.
The company had been a flagship of Mr Obama’s attempt to stimulate new environmentally friendly industries but ran into difficulties as a result of slower than expected sales of electric cars.
Its bankruptcy follows that of other companies backed by US government grants or loan guarantees, including Solyndra, a manufacturer of solar modules, Abound Solar, another panel maker, and Ener1, which also makes batteries for electric cars.
A123 did not get a loan guarantee but was awarded the $249m grant as part of the Obama administration’s stimulus in 2009. By the end of June it had drawn down only about $130m of the money because demand for its products was not strong enough to justify additional investment in manufacturing capacity.
It also received grants and tax credits from the state of Michigan of up to $141m.
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