A123 Systems, a company that develops and manufactures lithium-ion batteries and battery systems for the transportation, electric grid services, and portable power markets, announced that it has reached agreement on the terms of an asset purchase agreement with Wanxiang America Corporation (“Wanxiang”) through which Wanxiang would acquire substantially all of A123’s assets for $256.6 million.
This agreement was reached following an auction conducted under the supervision of the United States Bankruptcy Court for the District of Delaware (the “Court”). A hearing at which A123 and Wanxiang will seek the required Court approval of the sale is scheduled for Tuesday, December 11, 2012.
According to the terms of the asset purchase agreement, Wanxiang would acquire A123’s automotive, grid and commercial business assets, including all technology, products, customer contracts and U.S. facilities in Michigan, Massachusetts and Missouri; its cathode powder manufacturing operations in China; and its equity interest in Shanghai Advanced Traction Battery Systems Co., A123’s joint venture with Shanghai Automotive.
Excluded from the asset purchase agreement with Wanxiang is A123’s Ann Arbor, Mich.-based government business, including all U.S. military contracts, which would be acquired for $2.25 million by Navitas Systems, a Woodridge, Ill.-based provider of energy-enabled system solutions and energy storage products for commercial, industrial and government agency customers.
“As we had hoped, the auction process for A123’s assets was robust and competitive. We are pleased with the result of the auction and believe that the selected bids from Wanxiang and Navitas maximize the value of A123’s assets for the benefit of our stakeholders. We expect that the sale will be approved by the Court, at which time we plan to execute the separate asset purchase agreements with Wanxiang and Navitas,” said Dave Vieau, Chief Executive Officer of A123. “We think we have structured this transaction to address potential national security concerns expressed during the review of our previous investment agreement with Wanxiang announced in August as well as to address concerns raised by the Department of Energy. We believe this transaction balances those risks with A123’s obligation to act in the best interest of our creditors.”
Wanxiang America is a subsidiary of Wanxiang Group, China’s largest automotive components manufacturer and one of China’s largest non-state-owned companies. A123 is Wanxiang’s fifth clean energy investment in the U.S. in 2012.
“We believe that A123’s industry-leading technology for vehicle electrification, grid energy storage and other industries complements Wanxiang’s strong R&D and manufacturing capabilities, so we think adding A123 to our portfolio of businesses strongly aligns with our strategy of investing in the automotive and cleantech industries in the U.S.,” said Pin Ni, president of Wanxiang America. “We plan to build on the engineering and manufacturing capabilities that A123 has established in the U.S. and we are committed to making the long-term investments necessary for A123 to be successful.”
A123 Systems was founded in 2001 to commercialize new battery technology developed at the Massachusetts Institute of Technology. The company began selling its first products commercially in the first quarter of 2006. The company had an IPO in 2008 and filed for bankruptcy in October, 2012.