U.S. Government Approves Of Wanxiang’s Acquisition Offer For A123 Systems
The U.S. government has approved of Wanxiang Group’s offer for A123 Systems. A123 Systems is a bankrupt electric car battery manufacturing company that was partially funded by the U.S. government. A Chinese company buying out a U.S. backed company sounded a bit controversial, which is one of the reasons for the delay.
Congress members and retired military leaders said that the sale of A123 to Wanxiang would transfer sensitive technology to China and they had asked the U.S. committee to block the sale. A123 Systems filed for bankruptcy back in October because of weaker-than-expected demand for hybrid vehicles. The company was also plagued with technical problems. The U.S. government plugged in a $249 million grant to promote clean energy. Around half of that money was never used.
A123 was sold in December at an auction supervised by the U.S. Bankruptcy in Delaware. Wanxiang outbid Johnson Controls with a price of $257 million. The money from the auction will go towards paying back A123’s $376 million in debt. Wanxiang attempted to circumvent concerns from the U.S. government by excluding A123’s defense contracts from their bid. The defense contracts were sold to Navitas Systems for $2.25 million.
Wanxiang generates around $1 billion in U.S. revenue by supplying parts to GM and Ford. They have also bought or invested in over 20 U.S. companies, many of them in bankruptcy mode.