| WILMINGTON, Del.
WILMINGTON, Del. Dec 8 China's largest maker of
auto parts won a politically sensitive auction for A123 Systems
Inc, a bankrupt maker of batteries for electric cars
that was funded partly with U.S. government money, the
investment banker for A123 said on Saturday.
Timothy Pohl of Lazard Freres said Wanxiang Group Corp's bid
of about $260 million topped a joint bid from Johnson Controls
Inc of Milwaukee and NEC Corp of Japan for the
maker of lithium-ion batteries.
Siemens AG of Germany had also qualified to bid,
according to two people familiar with the auction, who asked not
to be identified. The auction began on Thursday.
The sale did not include parts of A123's business that works
with the U.S. Defense Department, a source close to the deal
said. That portion of the company went to another bidder, which
the source did not identify.
U.S. politicians have warned that A123 and its sensitive,
U.S. taxpayer-financed technology must not fall into the hands
of a Chinese company.
The sale must be approved by Delaware Bankruptcy Court judge
Kevin Carey at a hearing scheduled for Tuesday.
Opposition to the deal will likely focus on the Committee on
Foreign Investment in the United States, which would need to
approve the sale to Wanxiang.
U.S. politicians and retired military leaders have already
pressed the government panel to reject Wanxiang.
The U.S. government has also warned it must give its consent
before its $249 million grant to A123 can be transferred to a
new owner. The battery maker can still draw $120 million under
various government grants, according to court records.
A123, whose customers include Fisker Automotive, General
Motors Co, BMW and the U.S. military, received
the U.S. government grant as part of a program to promote clean
Wanxiang has had its eyes on A123 for a while. The Chinese
company struck a $465 million investment deal meant to save A123
from bankruptcy earlier this year. That agreement fell apart
after A123 failed to meet certain criteria, according to court
The Chinese company is no stranger to investing in the
Wanxiang generates about $1 billion in revenue in the United
States by supplying parts to GM and Ford Motor Co and has
bought or invested in more than 20 U.S. companies, many of them
in bankruptcy, said a congressional report.
Those past investments could help Wanxiang get approval to
buy A123, but the deal will be closely scrutinized because it
involves advanced technology, said Andrew Szamosszegi, who wrote
the report for the U.S.-China Economic and Security Review
A123 filed for Chapter 11 bankruptcy protection in October.
The money from the auction will go toward paying off A123's
creditors. The company listed liabilities of $376 million when
it filed for bankruptcy.