China firm to buy A123 despite tech transfer fears
By Tom Hals and Ben Klayman, ReutersChina's largest auto parts maker won U.S. government approval to buy A123 Systems Inc., a maker of electric car batteries, despite warnings by some lawmakers that the deal would transfer sensitive technology developed with U.S. government money.
January 31, 2013, 12:06 am TWN
The sale of the lithium-ion battery maker to a U.S. unit of Wanxiang Group was approved by a U.S. government committee on foreign investment, according to a statement from the Chinese company. The companies later said the deal had been completed.
Last month, Wanxiang's U.S. unit agreed to pay US$257 million for A123's automotive battery business and related assets in a bankruptcy auction, beating U.S. rival Johnson Controls Inc. of Milwaukee.
But the transaction still needed approval by the Committee on Foreign Investment in the United States, a government body led by the Treasury secretary. The committee approved the deal on Monday night, according to Wanxiang.
“Wanxiang America looks forward to closing the transaction and to continuing to foster the technologies A123 has worked so hard to develop,” said Pin Ni, the president of Wanxiang America Corp., in a statement.
Jason Forcier, president of the newly formed A123 Systems LLC's auto business, said Wanxiang was focused on pushing A123 to profitability within a few years. “Wanxiang obviously brings financial stability to the company that we haven't had in at least the last six to 12 months,” he said in a telephone interview.
Some members of Congress and the Strategic Materials Advisory Council — a group including retired military leaders that is focused on protecting the U.S. industrial supply chain — said the sale to Wanxiang could jeopardize U.S. energy security and they asked the U.S. committee to block it.
A123 had received a US$249 million grant from the U.S. government as part of a stimulus program to promote clean energy, although about half of that money was never released.
The company filed for bankruptcy in October due to weaker-than-expected demand for hybrid vehicles and technical problems.
The company makes batteries for Fisker Automotive, BMW hybrid 3- and 5-Series cars, and General Motors Co.'s all-electric Chevrolet Spark, which is scheduled for release later this year. China's SAIC Motor Corp. and India's Tata Motors also are customers.
The money raised by the sale will be used to repay the battery maker's debts of about US$376 million.
Wanxiang tried to blunt criticism of the deal by excluding A123's defense contracts from its bid at the auction. Those were sold separately to Illinois-based Navitas Systems for US$2.25 million.