WALTHAM, Mass. – Johnson Controls officially withdrew from the bankruptcy auction to acquire portions of A123 Systems when it declined to match a higher bid submitted by Wanxiang. Subsequently, A123 representatives accepted Wanxiang’s bid of $257 million as the best offer for the total company over a set of competing complementary bids by Johnson Controls for the automotive and government assets and NEC for the grid and commercial assets.
The final sale is subject to approval by the bankruptcy court. A hearing is currently scheduled for Dec. 11. The sale to Wanxiang is also subject to review by the Committee for Foreign Investment in the United States (CFIUS) and requires approval by the U.S. government.
"While A123’s automotive and government assets were complementary to Johnson Controls’ portfolio and aligned with our long-term goals, Wanxiang’s offer was beyond the value of those assets to Johnson Controls," said Alex Molinaroli, president, Johnson Controls Power Solutions.
Molinaroli added that reports that its proposal involved an elimination of jobs in Michigan are inaccurate.
According to the terms of the asset purchase agreement, Wanxiang will acquire A123’s automotive, grid and commercial business assets, including all technology, products, customer contracts and U.S. facilities in Michigan, Massachusetts and Missouri; its cathode powder manufacturing operations in China; and its equity interest in Shanghai Advanced Traction Battery Systems Co., A123’s joint venture with Shanghai Automotive. Excluded from the asset purchase agreement with Wanxiang is A123’s Ann Arbor, Mich.-based government business, including all U.S. military contracts, which will be acquired for $2.25 million by Navitas Systems, a Woodridge, Ill.-based provider of energy-enabled system solutions and energy storage products for commercial, industrial and government agency customers.
“As we had hoped, the auction process for A123’s assets was robust and competitive. We are pleased with the result of the auction and believe that the selected bids from Wanxiang and Navitas maximize the value of A123’s assets for the benefit of our stakeholders. We expect that the sale will be approved by the Court, at which time we plan to execute the separate asset purchase agreements with Wanxiang and Navitas,” said Dave Vieau, CEO of A123. “We think we have structured this transaction to address potential national security concerns expressed during the review of our previous investment agreement with Wanxiang announced in August as well as to address concerns raised by the Department of Energy. We believe this transaction balances those risks with A123’s obligation to act in the best interest of our creditors.”
Based in Chicago, Wanxiang America has been in the automotive and industrial markets in the U.S. since 1994 and currently has more than 3,000 employees in the U.S. It is a subsidiary of Wanxiang Group, China’s largest automotive components manufacturer and one of China’s largest non-state-owned companies, and Wanxiang also continues to expand its interest in clean technology, and A123 is Wanxiang’s fifth clean energy investment in the U.S. in 2012.
“We believe that A123’s industry-leading technology for vehicle electrification, grid energy storage and other industries complements Wanxiang’s strong R&D and manufacturing capabilities, so we think adding A123 to our portfolio of businesses strongly aligns with our strategy of investing in the automotive and cleantech industries in the U.S.,” said Pin Ni, president of Wanxiang America. “We plan to build on the engineering and manufacturing capabilities that A123 has established in the U.S. and we are committed to making the long-term investments necessary for A123 to be successful.”
