NEC and Siemens Bid For A123 Systems

Posted Dec 7, 2012

A123 Systems is the bankrupt lithium-ion automotive battery company that has received bids from at least three foreign rivals.  The company was partially funded by the U.S. Department of Energy.  Johnson Controls of Milwaukee and Wanxiang Group Corporation of China both sent out their bids for A123. Two other bidders that recently joined the auction include NEC Corporation of Japan and Siemens AG of Germany.

Aside from these four bidders, there are other bidders that are interested in buying smaller pieces of A123.  The auction was taking place behind closed doors at the Chicago law offices of Latham & Watkins.

The start of the auction was delayed because the contracts had to be reviewed and the auction could go into next week.  Wanxiang’s bid may face political risks because it could look bad that the U.S. government invested in a company that could be owned by the Chinese.  If Wanxiang wins the auction, it would need approval from the Committee on Foreign Investment in the United States.

The U.S. government warned that A123 would need their consent before its $249 million grant to A123 can be transferred to a new owner and said that the company could still draw $120 million from government grants.  A123 received the $249 grant as part of a program that would promote clean energy.  A123’s customers include General Motors, BMW, Fisker Automotive, and the U.S. military.

A123 had struck a $465 million investment deal with Wanxiang earlier this year, but the deal fell through after A123 failed to meet criteria.  Wanxiang makes around $1 billion in revenue in the U.S. as a supplier for GM and Ford.  They have bought and invested in over 20 U.S. companies.  Many of those companies were in bankruptcy.

Johnson Controls made an initial bid of $125 million for A123.  The money made from the auction will go towards paying A123’s creditors.

The company had around $376 million in liabilities around the time that they filed for bankruptcy.