The Chinese government agreed to a plan by local auto parts maker Wanxiang Group Corp. to acquire bankrupt US battery maker A123 Systems Inc. Wanxiang’s plans, however, depend on the results of an auction set in December 2012 as well as the approval from the US government. A123, which produces lithium ion batteries for electric cars, filed for Chapter 11 bankruptcy protection in October 2012 with a plan to divest its battery operations to Johnson Controls for $125 million.
The planned sale, however, hinges on whether better offers are received at the auction next month. Wanxiang has disclosed that it intends to place a bid for A123. In a statement posted at its Web site, China's National Development and Reform Commission – which approves major overseas acquisitions by Chinese companies – confirmed that the green light was given to Wanxiang to make a bid for A123.
The US government, however, must approve any deal for A123, since the battery maker was granted a $249 million financing from the Energy Department. Republican Senators John Thune and Chuck Grassley have raised concerns about Wanxiang's plans to buy A123's battery business, saying that military and taxpayer-funded technology should not be allowed to be controlled by foreign companies. The Energy Department has emphasized that none of the government's grant would be allowed to finance facilities outside the US.