The continuing saga of lithium ion battery maker A123 Systems entered a new chapter over the weekend as Chinese conglomerate A123 Systems successfully won the bid for nearly all of its assets at a cost of $256.6 million.
The one asset that Wanxiang didn’t buy was the military contract A123 had, which Illinois based Navitas Systems bought. This was an obvious nod, on the part of Wanxiang, to the opposition in Congress to the sale of A123 Systems to the Chinese.
What’s so unfortunate about the politicization of this deal is that A123 Systems and shareholders are the one’s getting the short end of the deal. And not because A123 has nefarious plans to move jobs to China. But because the initial opposition from lawmakers played a part in the initial deal falling through.
Wanxiang had initially agreed to invest $465 million for 80 percent of the company but the deal fell apart as government opposition grew. Now, Wanxiang is getting the entire company, fresh out of bankruptcy for almost half the cost. That means shareholders likely will get nothing and A123 executives will have no control over the destiny of the company and its workers.
Now the deal could still die since it requires approval from the Committee for Foreign Investment in the United States (CIFIUS). But at this point, approval is probable with so many jobs on the line. For Wanxiang, the initial opposition from Congress simply meant eventual bankruptcy for A123 and an even better deal for the Chinese conglomerate.