Chinese firm completes deal for A123
A Chinese-owned company completed its purchase of nearly all assets of bankrupt Waltham battery maker A123 Systems Inc. Tuesday, a day after winning approval of the deal by a federal oversight committee.
Wanxiang America Corp., the North American subsidiary of the Chinese auto parts conglomerate Wanxiang Group, said it was notified Monday that the Committee on Foreign Investment in the United States, or CFIUS, had cleared its purchase of A123. CFIUS is a secretive federal panel that scrutinizes foreign acquisitions of American businesses to protect national security.
The closing of the deal culminates Wanxiang’s months-long pursuit of A123, which struggled in recent years as electric vehicles, one of its key markets, failed to grow as quickly as predicted. Wanxiang has pledged to maintain and grow operations in the United States and Massachusetts. A123 had about 1,000 US employees in December, including 300 in Massachusetts.
Rob Johnson, president of A123’s Westborough-based energy solutions group, which makes batteries for utility-scale power storage, said those operations will remain in Massachusetts and are expected to expand as Wanxiang introduces A123 to new customers like State Grid, one of China’s major grid operators. The group now employs about 150.
“They’ll bring us access to China and a [strong] balance sheet,” Johnson said.
After A123 filed for bankruptcy protection in October, Wanxiang won an auction overseen by the bankruptcy court to acquire all but the company’s US military business and contracts. Wanxiang bid nearly $257 for the advanced battery maker.
“We’re pleased the government has completed its review and provided us with the go-ahead to finalize this transaction,” Pin Ni, president of Wanxiang America, said in a statement. “The future is bright for A123. It is a company with exceptional talent and potential, and Wanxiang America is committed to its long-term success and the continuance of its US operations.”
A CFIUS representative declined to comment, saying that by law the panel does not disclose details about the transactions it reviews
The acquisition has been controversial because US taxpayers provided tens of millions of dollars that supported the commercialization of A123’s technology with the construction of two manufacturing plants in Michigan.
Critics said the acquisition would put sensitive technology in the hands of the Chinese government.
“This disappointing decision represents a 180-degree reversal by the Obama administration in just eight days, from the president’s inaugural pledge to no longer ‘cede to other nations’ critical energy technology,” said Dean Popps, cochairman of the Strategic Materials Advisory Council, a coalition of former military leaders and industry experts opposed to A123's sale to Wanxiang. “His administration has just allowed China to leapfrog the world in advanced batteries at the expense of American taxpayers.”
With the deal’s closing, A123's longtime chief executive Dave Vieau said he will leave the company to pursue other interests. Ni praised Vieau for his work at A123
“Wanxiang America will continue to foster the technologies A123 has worked so hard to develop,” Ni said.
In addition to having its headquarters here, A123 conducts research and development and manufactures enormous batteries for use on electric grids in Massachusetts.
Wanxiang has operated in the United States for about two decades, acquiring several US companies over the years and expanding them.
Its growing presence in the alternative energy business includes a large stake in GreatPoint Energy in Cambridge.Erin Ailworth can be reached at email@example.com.