Wanxiang Group won the auction for the maker of batteries for electric cars A123 System’s assets.
Wanxiang Group offered $256.6 million, a bid much higher than the one offered by Johnson Controls of Milwaukee and NEC Corp from Japan. The sales did not include the Waltham, Massachusetts-based company’s military business, which was sold to Navitas Systems for $2.25 million. The agreement still needs the court approval and be reviewed by the Committee on Foreign Investment in the U.S.
This deal is of utmost importance for Wanxiang , as China plans to push its automakers in developing electric vehicles. The Chinese company planned to buy A123’s assets in October, but when the company filed for bankruptcy protection it also agreed to sell its business to Johnson Controls.
“It is a good move for Wanxiang in the long term to get hold of the research and development capability of batteries even though it’s not likely to generate any immediate sizable profits,” said Han Weiqi, an analyst with CSC International Holdings Ltd. in Shanghai. “There are some uncertainties as per whether CFIUS will approve the deal but the chances of them getting the American government’s nod are pretty high.”
Republican Senators John Thune and Chuck Grassley have expressed their concerns regarding this deal which implies selling technology to the Chinese rival company and therefore reaching the wrong hands.