A123 Systems sells itself to American arm of Wanxiang Group for $256.6 million

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A123 Systems sells itself to American arm of Wanxiang Group for $256.6 million

You can already see the gnashing of Republican teeth in the news as they attempt to slam the Obama Administration over this. Basically, A123 Systems has been in trouble all year, ended up in bankruptcy earlier this fall, and has now held an auction where a Chinese autoparts maker (Wanxiang Group) is buying nearly everything. The Republican teeth gnashing is over this sale of American Technology to the Chinese.




The bankruptcy process began in September after A123 and Johnson Controls started to make an agreement because of controversy stirred up when A123 and Wanxiang first announced their deal.


A123 Systems has always funded itself by selling stock. However, the real problems began almost a year ago when Fisker found manufacturing defects in battery packs supplied by A123 Systems. Those defects had the potential of causing fires. They launched a recall program then


Later, other defects were found - e.g. the unexpected shutdown of the Fisker Karma being tested by Consumer Reports was due to a fault in A123's batteries. Those defects led to a $55 million campaign to replace battery packs. That blew a hole in A123's finances and sent the company into a tailspin from which they did not recover.




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