Chinese Bidder Wins Auction for A123 Assets

China's Wanxiang Group has agreed to pay $257 million to buy most of the assets of bankruptcy Waltham, Mass.-based A123 Systems Inc.

The offer by the group's Wanxiang America unit in Chicago topped those of such other bidders as Johnson Controls and NEC.

A123 and Wanxiang hope to gain approval for the sale in bankruptcy court on Tuesday.

The proposed deal excludes A123's government-based business in Ann Arbor, Mich. The company plans to sell those parts of its business to Navitas Systems in Woodridge, Ill., thus deflecting much of the Congressional concern about a sale that could involve American military technology.

A123 proposes to sell all technology, products, customer contracts and facilities in Massachusetts, Michigan and Missouri related to its automotive and grid businesses. The sale also would include the battery maker's cathode powder production unit in China and its equity stake in the Shanghai Advanced Traction Battery Systems Co. venture with Shanghai Automotive.

Such a sale will require approval of the U.S. Committee on Foreign Investment, a group representing nine federal agencies that scrutinized transactions that could affect national security. The Dept. of Justice also claims veto rights, explaining that a sale must protect the interests of the federal government.

A123, which has received a $249 million grant from U.S. Dept. of Energy, filed for Chapter 11 protection on Oct. 16.