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Japan’s NEC to buy unit of Waltham battery maker A123

A nanophospate lithium ion battery made by A123 Systems.

Paul Sancya/AP

A nanophospate lithium ion battery made by A123 Systems.

The Chinese owner of A123 Systems LLC on Monday sold a large Massachusetts division of the battery maker to Japan’s NEC Corp. for about $100 million.

The Japanese technology company will buy A123 Energy Solutions, which is based in Westborough and makes large battery systems, known as grid scale, that might be used by utilities to store power from intermittent sources such as wind turbines. The acquisition, from the American subsidiary of the Chinese auto parts conglomerate Wanxiang Group — which bought A123 out of bankruptcy in late 2012 — is expected to close in June.

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In a statement, NEC said the purchase will add to its technology and help make the Japanese company one of the world’s largest makers of grid-scale batteries.

NEC spokesman Joseph Jasper said A123’s commercial experience was a big draw for his firm. “One of the big appeals with A123 was that they already have market presence and they aleady have products out there,” he said.

NEC was one of the original bidders in the bankruptcy auction for A123, which had received tens of millions in government aid before its prospects were damaged by an anemic electric car market and a costly battery recall. NEC was outbid by Wanxiang, China’s largest auto parts manufacturer, which bought A123 for $256.6 million.

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The Japanese firm, however, remained interested in acquiring A123’s grid storage business, and continued discussions with Wanxiang, said A123 Energy Solutions spokesman Roger Lin. “That’s been ongoing for some time,” Lin said Monday, “and finally sort of came to a head.”

Lin said NEC is expected to keep the grid battery division in Massachusetts, where it employs about 140 people. A123, meanwhile, will have about 100 employees in the state, primarily doing research and development.

A123 Systems spokesman Jeff Kessen said the sale of the grid storage division was in large part the result of Wanxiang’s desire to focus on automotive batteries. Wanxiang in February spent $149 million to purchase a bankrupt California electric vehicle maker, Fisker Automotive, which earlier used A123 batteries in its Karma car.

Kessen said Wanxiang believes NEC will be a good owner for the grid storage business because the company is “prepared to make the investments that are necessary.” A123 will still supply NEC with key battery parts, called cells.

Sam Jaffe, an analyst at Navigant Research in Colorado, said focusing A123 on the automotive market makes sense, since Wanxiang is well known as an auto parts company and “supplying batteries is just another auto part.”

Dean Frankel, a research associate at Lux Research in New York, noted that A123 lost grid storage business during its bankruptcy and, while recovering some, it has announced only a handful of new projects.

“It may just be more of a synergy with NEC than it is Wanxiang looking at this market and having trouble with it,” he said.

As part of the deal, NEC will acquire a facility in Chesterfield, Mo., where A123 develops software for its grid storage batteries. NEC will also enter into a venture with Wanxiang in China to help it do business there.

Erin Ailworth can be reached at erin.ailworth@globe.com. Follow her on Twitter @ailworth.
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