Wanxiang has a new strategy to push forward its purchase of the majority A123 Systems and avoid the US authorities plan to block the deal.
Wanxiang aims at forming a new independent trust to purchase the A123 civilian unit, which represents the bulk of its operations. The Chinese industrial group will then buy the business from the trust and so get the approval from the Committee on Foreign Investment in the US, which analizes foreign acquisitions for national security implications.
Wanxiang’s attempt to purchase A123, comes at the worst time, as US manifests its concern about China gaining access to the country’s strategically significant assets. Friday, January 18th, A123 said that it expects the Wanxiang deal to be finalized by February 1st, while the Chinese company said that it hopes to close the deal in two weeks.
The A123 defense division, which supplies batteries for the US satellites, military vehicles and other uses, was already purchased for $2.25 million by Illinois-based Navitas, also to satisfy the US security concerns. Wanxiang has offered $257 million to purchase A123 civil business and said it will continue to invest in the company and develop it.
“The number one job of the government is national security of the US, and the government needs to do its job here. It cannot pass this off as just another commercial transaction,” said Dean Popps, the former top procurement executive for the US Army, who is a member of the council.