Battery-Maker A123’s Sale Is Bizarre Merry-Go-Round
Oh the irony. Wanxiang will not be allowed to buy struggling battery maker A123, but the Chinese supplier’s money continues to be crucial to A123’s survival. Meanwhile, A123 has said it prefers Johnson Controls to buy part of A123 rather than having Wanxiang buy all of the company. What am I missing here?
Chinese supplier Wanxiang, which has significant operations in the United States, put in a bid to buy all of A123 in August. At that time Wanxiang advanced A123 $25 million so the struggling battery maker could stay afloat. A123 has basically been depending on handouts for survival for months, including a $249 million Department of Energy loan. Because of that loan, several U.S. congressmen have objected to Wanxiang’s purchase of A123, apparently preferring to let the company go out of business rather than being bought by a, gasp, Chinese company.
Just when it seemed A123 would go belly-up, however, in October in rides a white knight, U.S.-based Johnson Controls. But JCI doesn’t want to buy all of A123, it seems, only the automotive assets. Huh? A123 nonetheless expresses its preference for JCI’s bid. The plot thickens, however. Seems the JCI bid was really for the purpose of “making a market” for A123. Now Japan’s NEC Corp. and Germany’s Siemens say they are also interested. Wait a minute, those are foreign companies! Why should they be allowed to buy a company that has been partly supported by U.S. taxpayers’ hard-earned dollars?
Meanwhile (I have a hard time keeping up with all the twists and turns in the A123 saga, frankly) A123 actually files for bankruptcy in October. And though JCI is apparently the preferred bidder for some of A123’s assets, JCI didn’t want to loan the battery maker money so it could stay in business while waiting to be sliced and diced and sold off. Who steps in offering $50 million? Wanxiang!
My sources at Wanxiang say it wants to show it is serious about buying A123. More serious than those U.S. congressmen are about keeping an American company alive, it seems. I am pretty sure Wanxiang won’t end up owning A123. And whoever does buy A123 will owe Wanxiang $75 million.
However, it seems that more of the DOE funds owed A123 (it hadn’t drawn down the full $249 million loan) are now being sent to the company. Maybe the U.S. government was shamed into coughing up some money after Wanxiang stepped up. It’s actually more likely that the DOE check was an accounting error—perhaps just another pratfall in an ongoing comedy of errors.
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