The A123 Systems, Inc., a manufacturer of lithium-ion (Li-ion) batteries, story takes a few more twists and turns. The company declared bankruptcy in Oct. 2012 and announced that it had entered an asset purchase agreement with Johnson Controls. From the A123 Systems About Us webpage,
Asset Purchase Agreement and Chapter 11 Information
On October 16, 2012, A123 Systems, Inc. announced that it has entered into an asset purchase agreement with Johnson Controls, Inc., which plans to acquire A123’s automotive business assets, including all of its automotive technology, products and customer contracts, its facilities in Livonia and Romulus, Mich., its cathode powder manufacturing facilities in China, and A123’s equity interest in Shanghai Advanced Traction Battery Systems Co., Alpha’s joint venture with Shanghai Automotive. The asset purchase agreement also includes provisions through which Johnson Controls intends to license back to A123 certain technology for its grid, commercial and government businesses.
A123 Systems, Inc., a developer and manufacturer of advanced Nanophosphate® lithium iron phosphate batteries and systems, today 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.
The 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.
The Oct. 2012 deal with Johnson Controls seems to have collapsed, which occasioned this December 2012 auction in which Johnson Controls did participate initially. From the Dec. 9, 2012 Johnson Controls news release on PR Newswire,
Johnson Controls officially withdrew from the bankruptcy auction to acquire portions of A123 Systems when it declined to match a higher bid submitted by Wanxiang. Subsequently A123 representatives have announced they selected Wanxiang’s bid of $257 million as the best offer for the total company over a set of competing complementary bids by Johnson Controls for the automotive and government assets and NEC for the grid and commercial assets.
“While A123’s automotive and government assets were complementary to Johnson Controls’ portfolio and aligned with our long-term goals, Wanxiang’s offer was beyond the value of those assets to Johnson Controls,” said Alex Molinaroli, president, Johnson Controls Power Solutions. “Reports by other parties that our proposal involved an elimination of jobs in Michigan are inaccurate.”
The Dec. 10, 2012 news article on Bloomberg Businessweek website provides more detail and some analysis,
Wanxiang is seeking A123’s battery technology, used in Fisker Automotive Inc.’s Karma sedan, as China pushes its companies to develop electric vehicles. An earlier accord with the Chinese company was scrapped in October, when A123 said it filed for bankruptcy protection and agreed to sell its automotive assets to Johnson Controls.
“The purchase of A123 would automatically vault Wanxiang to become probably the number one battery maker in China,” said Shu Sun, a Beijing-based analyst at Bloomberg New Energy Finance. “Technology-wise, no battery company in China is likely to match A123’s products in performance and reliability.”
A123 supplies electric-car batteries to a dozen customers, according Bloomberg New Energy Finance estimates. That’s the highest number of clients in the industry, though LG Chem Ltd. and NEC Corp. (6701)’s venture with Leaf-maker Nissan Motor Co. have higher volume sales, Sun said.
Wanxiang Qianchao Co. (000559), a listed unit of the closely held parent advanced 1.4 percent to 4.25 yuan in Shenzhen trading today, narrowing its loss for the year to 25 percent.
The auction results also pave the way for Hangzhou, China- based Wanxiang to receive A123’s cathode powder plant in China and its share of a joint venture with Shanghai Automotive Industry Corp. called Shanghai Advanced Traction Battery Systems Co., according to yesterday’s statement.
Navitas Systems, a Woodridge, Illinois-based company, will buy A123’s Ann Arbor, Michigan-based government business for $2.25 million, according to the statement.
A123, the recipient of a $249.1 million federal grant, held the auction behind closed doors in the Chicago law offices of Latham & Watkins. The auction began on Dec. 6 with prospective bidders including Johnson Controls, Wanxiang, Siemens AG (SIE) of Germany and Tokyo-based NEC Corp.
As to the why and how of A123 Systems’ bankruptcy in the first place, Dexter Johnson in his Oct. 17, 2012 posting on Nanoclast (on the IEEE [Institute of Electrical and Electronics Engineers] website) suggests it had to do with old fashioned supply and demand economics,
The underlying problems of A123 Systems, Solyndra, and Konarka are not political ones of governmental policies—they’re illustrations of the futility of ignoring good old-fashioned supply-and-demand economics. (Solyndra, besides never being competitive with traditional energy sources, was also forced to compete with heavily subsidized solar alternatives.)
There is little question that A123 Systems made a better Li-ion battery than its competitors. The problem was the nano-enabled battery that they came up with for powering electric vehicles (EVs) was not in competition with other Li-ion batteries, but with the internal combustion engine.
This is not a political issue or an ideological issue, it’s a numbers issue. …
Dexter mentions A123 Systems again in an Oct. 19, 2012 posting (Nanotechnology As Socio-Political Project), featuring a broader analysis of the issues around commercializing technologies. There’s a thesis in here for someone.
ETA Dec. 13, 2012: The US Bankruptcy Court for the District of Delaware has approved the sale of A123 Systems’ military business to Navitas according to a Dec. 13, 2012 news item on Azonano,
Navitas Systems LLC, a leading provider of energy-enabled system solutions and energy storage products for commercial, industrial and government agency customers, today announced that the United States Bankruptcy Court for the District of Delaware (the “Court”) has approved the sale of A123 Systems’ Ann Arbor, Mich.-based government business, including all U.S. military contracts, for $2.3 million to Navitas. …
Navitas Systems can be found here.