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Johnson Controls files petition to dissolve Li-ion battery JV with Saft

18 May 2011

Johnson Controls, Inc. (JCI) has filed a petition with the Delaware Court of Chancery to dissolve Johnson Controls-Saft Advanced Power Solutions LLC (JCS), the automotive Li-ion battery joint venture between Johnson Controls and Saft. (Earlier post.) The filing is under the Dispute Resolution Provisions set forth in the Johnson Controls-Saft LLC Operating Agreement signed in January 2006.

JCI has advised Saft that the dispute is based on a wish to expand the scope of JCS beyond the limits set within the 2006 Agreement. Saft has advised JCI that it intends to oppose this filing as it sees no legitimate grounds for the dissolution.

Neither Johnson Controls-Saft, nor any of its subsidiaries, are an active party to the legal action. This matter arises out of a disagreement between Johnson Controls and Saft about the future direction of the joint venture; the filing does not affect Johnson Controls-Saft’s current contracts, production orders or program launches.

The joint venture was formed in 2006 to develop and manufacture lithium-ion automotive battery solutions. Johnson Controls says that it believes that as vehicle power train technologies continue to evolve and new markets emerge for advanced batteries, it must have access to multiple alternative technologies and be able to flexibly participate more broadly across the energy storage space.

Johnson Controls and Saft have a fundamental disagreement about the future direction and appropriate scope of the joint venture. The industry is evolving rapidly and the investments needed to achieve market leadership require us to do more than the joint venture has done or can do. This action reaffirms our strategic commitment to the advanced battery industry.

—Alex Molinaroli, president, Johnson Controls Power Solutions

Saft says that it has confidence in the strategy, the technological positioning, the management and employees of JCS and sees a profitable future for the venture as outlined in the current Business Plan. Saft further argues that JCS has become an important player in the automotive HEV/PHEV/EV market and has won a number of significant production contracts with major clients.

Saft says it has made a number of proposals to try to reach a compromise agreement with JCI and avoid any legal procedure. Although these proposals have been rejected by JCI, says Saft, it remains open to reaching a settlement that avoids protracted legal action.

Saft says that while it could consider some adjustments in the scope of the JV, it would not be in its strategic interest to address through JCS certain lithium-ion markets where Saft is already strongly positioned and enjoys a rapid development.

The Delaware Court of Chancery is a non-jury trial court that serves as Delaware’s court of original and exclusive equity jurisdiction, and adjudicates a wide variety of cases involving trusts, real property, guardianships, civil rights, and commercial litigation.

May 18, 2011 in Batteries | Permalink | Comments (2) | TrackBack (0)

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Comments

They will probably sue each other for patent rights for years to come.

This is the equivalent of a business divorce. Sometimes things don't work out, but with business contract law it is more difficult to part ways unless there is a major breach of contract.

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