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Deal falls through, but Chinese auto group still interested in acquiring bankrupt A123

A Chinese auto supplier whose deal to acquire A123 Systems fell apart said today that it’s still interested in acquiring the U.S.-funded, electric-vehicle battery supplier.

Wanxiang Group had agreed to pay as much as $465 million for up to 80% of A123 Systems, but that deal unraveled as A123 slipped into Chapter 11 bankruptcy Tuesday.

“Our interest and goal remains the same,” Wanxiang America President Pin Ni said in an e-mail.

Wanxiang’s interest in A123’s assets could complicate auto supplier Johnson Controls’ $125-million bid to acquire A123’s auto battery plants and technology. That tentative deal was revealed Tuesday as part of the A123’s bankruptcy petition.

In Chapter 11 bankruptcy, proposed sales must be approved by a judge who generally awards assets to the highest bidder, with the goal of returning money to creditors.

Wanxiang faces additional hurdles that Milwaukee-based Johnson Controls would not encounter. For example, Wanxiang would need to win approval to acquire A123 from the U.S. Committee of Foreign Investment in the United States. Also, several Republican members of Congress raised national security questions about Wanxiang’s original agreement to acquire A123.

Among A123’s most valuable assets are its battery plants in Livonia and Romulus, its current battery contracts and its intellectual property, which includes nanophosphate lithium battery production capability and a new battery-pack cooling technology revealed earlier this year.


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