A Chinese-owned company completed its purchase of nearly all assets of bankrupt Waltham battery maker A123 Systems Inc. Tuesday, a day after winning approval for the deal from a federal oversight committee.
Wanxiang America Corp., the North American subsidiary of the Chinese auto parts conglomerate Wanxiang Group, said it was notified Monday that the Committee on Foreign Investment in the United States, or CFIUS, had cleared its purchase of A123. CFIUS is a secretive federal panel that scrutinizes foreign acquisitions of US businesses to protect national security.
The closing of the deal culminates Wanxiang’s monthslong pursuit of A123, which struggled in recent years as one of its key markets, electric vehicles, failed to grow as quickly as predicted.
Wanxiang has pledged to maintain and expand operations in the United States and Massachusetts. A123 had about 1,000 US employees in December, including 300 in Massachusetts.
Rob Johnson, president of A123’s Westborough-based energy solutions group, which makes batteries for utility-scale power storage, said those operations will remain in Massachusetts and are expected to grow as Wanxiang introduces A123 to new customers like State Grid, one of China’s major grid operators. The group employs about 150.
“They’ll bring us access to China and a [strong] balance sheet,” Johnson said.
After A123 filed for bankruptcy protection in October, Wanxiang won an auction to acquire all but the company’s US military business and contracts. Wanxiang bid nearly $257 for the advanced battery maker.
“We’re pleased the government has completed its review and provided us with the go-ahead to finalize this transaction,” Pin Ni, president of Wanxiang America, said in a statement. “The future is bright for A123. It is a company with exceptional talent and potential, and Wanxiang America is committed to its long-term success and the continuance of its US operations.”
A CFIUS representative declined to comment, saying that by law the panel does not disclose details about its reviews.
The acquisition has been controversial because US taxpayers provided tens of millions of dollars that supported the commercialization of A123’s technology with the construction of two manufacturing plants in Michigan.
Critics said the acquisition would put sensitive technology in the hands of the Chinese government.
“This disappointing decision represents a 180-degree reversal by the Obama administration in just eight days, from the president’s inaugural pledge to no longer ‘cede to other nations’ critical energy technology,” said Dean Popps, cochairman of the Strategic Materials Advisory Council, a coalition of former military leaders and industry experts opposed to A123's sale to Wanxiang. “His administration has just allowed China to leapfrog the world in advanced batteries, at the expense of American taxpayers.”
With the closing, A123's longtime chief executive, Dave Vieau, will leave the company. Ni praised Vieau for his work at A123. “Wanxiang America will continue to foster the technologies A123 has worked so hard to develop,” Ni said.
In addition to having its headquarters here, A123 conducts research and development and makes enormous batteries for electric grids.