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Wanxiang Group's acquisition of lithium-ion battery maker A123 Systems has been approved by the US government, according to a statement from the Chinese auto parts maker. Wanxiang's US unit had agreed to pay $257 million for A123's automotive battery business and related assets in a bankruptcy auction.
The transaction was awaiting approval by the Committee on Foreign Investment in the United States, led by the US Treasury secretary. The committee approved the deal on Monday night, Wanxiang said. "Wanxiang America looks forward to closing the transaction and to continuing to foster the technologies A123 has worked so hard to develop," Pin Ni, the president of Wanxiang America, said in a statement.
The big question now is whether approval will end debate over whether the acquisition will transfer sensitive technology developed with US Department of Energy funding to a Chinese company. Last month, Wanxiang beat out US rival Johnson Controls Inc. in its bid for A123 Systems.
Some members of Congress said selling A123 to Wanxiang could jeopardize US energy security, and they asked the US committee to block it. Wanxiang worked on blunting the criticism, in part by excluding A123's defense contracts from its auction bid. Those were sold separately to Illinois-based Navitas Systems for $2.25 million.Some members of Congress said selling A123 to Wanxiang could jeopardize US energy security.
The sale had been approved by the US Bankruptcy Court. On January 18, A123 said it expected the deal to close by February 1, this coming Friday. A123 Systems declined to comment to Reuters on the US government approval.
Wanxiang's history of investing in the US market may have alleviated some of the Committee on Foreign Investment in the United States' concerns about the foreign company. Wanxiang makes about $1 billion a year in US revenue supplying parts to General Motors and Ford. According to a Congressional report, the Chinese company has bought or invested in more than 20 US companies, many of which were in bankruptcy.
A123 Systems had received a $249-million federal grant, although about half of that money was never released. The money raised at auction will be used to repay A123's debts of about $376 million.
The battery maker's customers have included Fisker Automotive, BMW (for the hybrid 3 and 5 Series cars), General Motors (all-electric Chevrolet Spark), China's SAIC and India's Tata Motors.
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A123 sale to Wanxiang Group approved by US government originally appeared on Autoblog Green on Wed, 30 Jan 2013 14:01:00 EST. Please see our terms for use of feeds.
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