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Johnson Controls files appeal of A123 sale, seeking payment of break-up fee and expenses; says still “open” to buying parts if Wanxiang sale not completed

17 December 2012

Johnson Controls filed an appeal in bankruptcy court of the 11 December 2012 sale order approving Wanxiang’s purchase of most of the assets of A123 Systems for $256.6 million. (Earlier post.)

As part of the sale order, the court had ordered the escrow of the break-up fee and expense reimbursement due to Johnson Controls under its stalking-horse agreement with A123. Johnson Controls is appealing the sale order to obtain the breakup fee and expense reimbursement to which it says it is entitled under that agreement and which were previously approved by the bankruptcy court.

Following the agreement on the sale, Johnson Controls had announced that it had officially withdrawn from the bankruptcy auction when it declined to match the higher bid submitted by Wanxiang. (Earlier post.) Johnson Controls and NEC had submitted complementary bids, Johnson Controls for the automotive and government assets and NEC for the grid and commercial assets. Johnson Controls originally made a $125-million stalking-horse bid for A123’s automotive business.

In that announcement, Alex Molinaroli, president, Johnson Controls Power Solutions, said that while A123’s automotive and government assets were complementary to his company’s portfolio and aligned with long-term goals, Wanxiang’s offer was beyond the value of those assets to Johnson Controls.

A123 was directed to place the breakup fee and expense reimbursement in escrow after A123’s creditors’ committee suggested to the court that Johnson Controls was lobbying against the sale of A123 to Wanxiang.

We appreciated the opportunity to serve as stalking horse, which resulted in significant value to the estate, creditors and employees. As a market leader and major employer with significant operations in the United States, we have expertise and insights regarding the industries we serve, which are important resources for leaders and decision makers. Our representatives regularly provide educational material and expert opinions on many topics including advanced batteries, lithium-ion technology and the various applications they serve.

—Alex Molinaroli

Johnson Controls said that it maintains an active government relations function that involves regular interaction with policy makers and agencies on the full range of issues relevant to the company. The activities of Johnson Controls’ representatives involving public officials are consistent with First Amendment rights to free speech and are strictly governed by the company’s ethics policy and comply with government regulations, the company asserted.

US regulatory approval required for any sale of A123 to Wanxiang has been an issue dating back to Wanxiang’s original failed attempt to acquire A123 earlier in 2012 prior to bankruptcy. Johnson Controls said that it has consistently maintained that national security questions tied to the core technology used in all of A123’s businesses represent a risk to the sale which cannot be dismissed until resolved by the government review process.

Should the sale of A123 Systems to Wanxiang not be completed for any reason, Johnson Controls remains open to considering future opportunities to acquire relevant portions of A123’s assets, keeping this critically important technology in the United States, preserving jobs and furthering the purpose of the American Reinvestment and Recovery Act.

—Alex Molinaroli

December 17, 2012 in Batteries | Permalink | Comments (9) | TrackBack (0)

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Comments

When the loser is outbid he seeks compensation from the winner!!!

What a corrupted sick society our neighbor have developed into?

Are unending lawsuits better than the cowboy days ways?

The national security value of this technology is far too great for it to be allowed to be taken to China.  The production of electrode materials and the associated knowhow should never have been allowed to leave the United States.

EP,

There are no publicly traded american corporations. Anyone on the exchanges is a global corporation with no loyalty to any country.

The value of this technology is that it replaces oil. We (the US) are the biggest investor in oil. If by national security you mean we own the technology so we can bury it under a bunch of false technology assertions and thus keep it from competing with our oil investments, then I agree. If you want to protect oil, kill the battery industry.


If you want someone who will actually make and sell the product, the Wanxiang is the better choice. They are not as heavily invested in oil, and they don't care much what happens to oil investors. Here in the US we are so heaviliy invested in oil, even the democrats hate batteries.

Yes B4, loyalty has shifted to the best bottom line, regardless of where the technology came from or where it is mass produced.

However, both buyers-users and international investors benefit. The real losers will be USA-EU middle class and lower classes looking for a good paying job.

Batteries for the first 10+ million BEVs (2 & 3 wheelers, cars-SUVs, trucks and buses) a year will most probably be built in China unless we find ways to compete.

This deal would never have been approved if it was a strategically important technology. Probably the DOE believes that there are sufficient alternative technologies that are equal or possibly better.

Does A123 actually have technology so unusual that selling to China would hurt US security?

My understanding is that other battery companies had largely caught up to what A123 was producing.

There's an interesting discussion of the problem here -

http://www.technologyreview.com/news/429647/a123s-technology-just-wasnt-good-enough/

And it's doubly interesting because it's a MIT site and the A123 came out of MIT. One would expect facts were carefully checked.

Sounds to me like the typical start-up. Some make it, some don't. I'm not seeing a national security issue.

" The real losers will be USA-EU middle class and lower classes looking for a good paying job."

Most likely whomever owns the plants, batteries will be manufactured in the region where they are installed.

Battery manufacturing isn't likely to have a large low-skilled labor input, or much of a labor input at all. Not a product that would benefit from being manufactured in a low wage country and shipped a long distance.

A single large container ship can carry over 16,000 containers from China to California and transport batteries at a very low cost per BEV. The same can be said for BEVs at 4 to 6 per container.

Future higher performance EV batteries will be (and are) mass produced in China, Japan and South Korea at a much lower cost than those produced in USA, i.e. more than enough to pay for shipping on large container ships. That is why China, South Korea and Japan control almost 80% of the battery market. To change that trend will require huge local investments ++.

Let's not forget that A123 cells have been made in China and Korea for a while now, they already have the technology. I don't see a security risk. It's just a battery....

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