Wanxiang Group Co., China's biggest auto-parts maker, won approval from the Committee on Foreign Investment in the U.S. to buy most of the assets of A123 Systems Inc., the bankrupt electric-car battery maker backed with U.S. government funds.

Approval from CFIUS, as it is known, was the final hurdle that Wanxiang needed to overcome to complete the deal. The federal interagency group led by the Treasury Department was reviewing the sale after members of Congress expressed national- security concerns over allowing a foreign competitor to obtain the technology developed with government backing.

Wanxiang, which won bankruptcy court approval of the acquisition Dec. 11, completed the purchase yesterday, Pin Ni, president of U.S. unit Wanxiang America Corp., said in an e- mail. Wanxiang America acquired substantially all of A123’s automotive, grid and commercial business assets for about $256.6 million. A123 and Wanxiang tried to mollify congressional anxiety by excluding the battery maker’s government business from the deal, which was sold to Woodridge, Illinois-based Navitas Systems LLC for about $2.25 million.

“We’re pleased the government has completed its review and provided us with the go-ahead to finalize this transaction,” Ni said in a statement. “The future is bright for A123. It is a company with exceptional talent and potential, and Wanxiang America is committed to its long-term success and the continuance of its U.S. operations.”

Deal Scuttled

The Waltham, Massachusetts-based battery maker filed for bankruptcy in October after a previous deal with Wanxiang was scuttled amid congressional Republicans’ reluctance to allow its sale to a Chinese company. A123 listed assets of $459.8 million and debt of $376 million as of Aug. 31 in court documents.

“Nothing provided by CFIUS has changed my opinion that the core technology developed by A123,” and the related intellectual property, “can be separated along A123’s business lines,” said Representative Bill Huizenga, a Republican representing Michigan’s 2nd Congressional District, in an e- mailed statement. “American taxpayers should not be funding technology that will in turn be used in competition against American companies,” he said, adding that he will look into legislation to prevent sales of taxpayer-funded “sensitive technologies” to foreign companies in the future.

Federal Grant

A123, which was awarded a federal grant of as much as $249.1 million and only used about $132 million to build two plants in Michigan, held a December auction where Wanxiang beat a joint bid from Milwaukee-based Johnson Controls Inc. and Tokyo-based NEC Corp.

“The Energy Department’s Recovery Act grant to A123 was used for the construction of brick and mortar advanced battery manufacturing facilities at two Michigan locations,” Bill Gibbons, a department spokesman, said in an e-mailed statement. The funds weren’t used for the company’s research and development of battery technology, he said.

“The purchase of these assets includes the Energy Department’s requirement that the plants and equipment partially paid for by the Recovery Act stay in Michigan and continue to operate, generating job opportunities for American workers,” Gibbons said.

Joint Venture

As part of the purchase Wanxiang, based in Hangzhou, China, will get A123’s cathode powder plant in China and its share of a joint venture with Shanghai Automotive Industry Corp., called Shanghai Advanced Traction Battery Systems Co., in addition to the battery technology used in Fisker Automotive Inc.’s Karma sedan.

Fisker, A123’s main customer, said it was awaiting the sale of the company’s Michigan plant so it could resume production of the $103,000 plug-in Karma sedan.

A123, whose automotive business supplies electric-car batteries to about a dozen customers, has facilities in the Michigan cities of Livonia and Romulus.

The grid business focuses on energy generation, transmission and distribution while the commercial division develops products for industries such as telecommunications, industrial robotics and power tools, according to court papers. A123 worked with the government on portable power solutions, unmanned aerial vehicles, pulsed power weapons as well as small energy cells for remote devices.

The case is In re A123 Systems Inc., 12-12859, U.S. Bankruptcy Court, District of Delaware (Wilmington).

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