Chinese Group Cleared to Buy Battery Maker A123

A government regulatory panel has approved Wanxiang Group Corp.'s acquisition of most of the assets of bankrupt lithium-ion battery maker A123 Systems Inc.

The ruling came from the Committee on Foreign Investment in the U.S., a group representing nine federal agencies that scrutinizes deals that could affect national security.

The decision clears the way for the Chinese company to complete the $257 million acquisition it agreed to in December. The purchase includes A123's automotive unit (which supplies batteries for electric and hybrid vehicles), its electric grid business and a stake in a Chinese joint venture.

A123 agreed last month to sell its government business separately to Woodridge, Ill.-based Navitas Systems LLC for $2 million. The move was apparently designed to ease Congressional concerns that selling that unit to Wanxiang would put sensitive U.S. military technology in Chinese hands.

But critics still object to the sale, saying it transfers important technology to a foreign company. They also complain that Wanxiang will benefit from a $133 million grant A123 received from the U.S. Dept. of Energy. The funds were used to build battery facilities in Michigan.