A123 officially has a new Chinese owner.
Battery maker A123 Inc. has been sold to China's Wanxiang Group Co. for $256.6 million. Wanxiang, China's largest auto parts maker, outbid Johnson Controls Inc. for the Massachusetts-based company in a U.S. bankruptcy auction.
Per the terms of the auction, Wanxiang will take over A123's automotive, grid and commercial businesses, but not the firm's military contracts. Those were won by Illinois-based Navitas Systems for $2.25 million.
The purchase agreement, which still must be approved by the Committee on Foreign Investment in the U.S., is seen as a major boon for Wanxiang and the Chinese auto industry as a whole. Wanxiang will instantly gain access to A123's advanced battery technology, which is used in vehicles like the Fisker Karma.
"The purchase of A123 would automatically vault Wanxiang to become probably the number one battery maker in China," said Shu Sun, a Beijing-based analyst at Bloomberg New Energy Finance. "Technology-wise, no battery company in China is likely to match A123's products in performance and reliability."
Prior to A123's bankruptcy filing, Wanxiang attempted to purchase an 80 percent stake in the battery maker for $465 million.
Although Wanxiang's winning bid was placed in a legal manner, the company's purchase of A123 isn't without controversy. A123 has received $249.1 million in federal funding, with many on Capitol Hill not happy that a government-supported firm will be going to a foreign owner.
However, there are a few hurdles yet to clear. The deal must be approved by U.S. Bankruptcy judge Kevin Carey at a December 11 hearing. If given the green light by Carey, the deal will have to be given the blessing of CFIUS, a multi-agency group led by the Treasury Department that reviews any purchase of a U.S.-based company by a foreign entity.