A123 Systems was founded out of research at the Massachusetts Institute of Technology and $100,000 in federal seed money in 2001. It became a darling of the "green" industry movement, securing $249 million in federal loan commitments in 2009, when an initial stock offering sold quickly and at high prices.
Not all the stimulus money was given to the company, but enough was that Gov. Mitt Romney added it to his list of wasted expenditures on green causes by the Obama administration.
A bankruptcy judge gave approval last week for Wanxiang to buy most of A123's assets. Because of its government contracting business, the sale to a Chinese-based Wanxiang has prompted critics to urge the government block the sale on national security and other grounds. Wanxiang points out, however, that the failed battery maker's government contracting business would go to another company based in the U.S.
The sale still requires approval from the Committee on Foreign Investment.
Johnson Controls was the initial bidder for A123 during the bankruptcy proceedings, but Wanxiang outbid them by about $5 million, with a bid of more than $256 million.
Johnson Controls said it is entitled to receive a breakup fee that was previously approved by the bankruptcy court. Last week, the bankruptcy court held Johnson Controls' breakup fee and expense reimbursement in escrow after creditors complained that the company was lobbying Congress to try to get the Chinese deal scuttled.
As Crain's Detroit Business reports, But Pin Ni, president of Elgin, Ill.-based Wanxiang America Inc., said the company has no intentions of letting A123's intellectual property run loose in China.
"We have not done a good job of explaining who we are," Ni said. "It's not like we walked across the China Sea yesterday. We've been here for almost 20 years, and Wanxiang is also the victim of the IP issue in China, and we have a very restrictive policy to protect our own IP, and we want to protect our interest" in A123.
In an editorial, Crain's Detroit says, "A federal panel may have the final say. If the deal fails, it should fail because U.S. interests could be hurt by the deal -- and not because of a knee-jerk, anti-Chinese action."