Wanxiang America Corporation to Acquire Substantially All Assets of A123 Systems for $256.6 Million

A123 Systems

A123 Systems, a company that develops and manufactures lithium-ion batteries and battery systems for the transportation, electric grid services, and portable power markets, announced that it has reached agreement on the terms of an asset purchase agreement with Wanxiang America Corporation (“Wanxiang”) through which Wanxiang would acquire substantially all of A123’s assets for $256.6 million.

This agreement was reached following an auction conducted under the supervision of the United States Bankruptcy Court for the District of Delaware (the “Court”). A hearing at which A123 and Wanxiang will seek the required Court approval of the sale is scheduled for Tuesday, December 11, 2012.

According to the terms of the asset purchase agreement, Wanxiang would acquire A123’s automotive, grid and commercial business assets, including all technology, products, customer contracts and U.S. facilities in Michigan, Massachusetts and Missouri; its cathode powder manufacturing operations in China; and its equity interest in Shanghai Advanced Traction Battery Systems Co., A123’s joint venture with Shanghai Automotive.

Excluded from the asset purchase agreement with Wanxiang is A123’s Ann Arbor, Mich.-based government business, including all U.S. military contracts, which would be acquired for $2.25 million by Navitas Systems, a Woodridge, Ill.-based provider of energy-enabled system solutions and energy storage products for commercial, industrial and government agency customers.

“As we had hoped, the auction process for A123’s assets was robust and competitive. We are pleased with the result of the auction and believe that the selected bids from Wanxiang and Navitas maximize the value of A123’s assets for the benefit of our stakeholders. We expect that the sale will be approved by the Court, at which time we plan to execute the separate asset purchase agreements with Wanxiang and Navitas,” said Dave Vieau, Chief Executive Officer of A123. “We think we have structured this transaction to address potential national security concerns expressed during the review of our previous investment agreement with Wanxiang announced in August as well as to address concerns raised by the Department of Energy. We believe this transaction balances those risks with A123’s obligation to act in the best interest of our creditors.”

Wanxiang America is a subsidiary of Wanxiang Group, China’s largest automotive components manufacturer and one of China’s largest non-state-owned companies. A123 is Wanxiang’s fifth clean energy investment in the U.S. in 2012.

“We believe that A123’s industry-leading technology for vehicle electrification, grid energy storage and other industries complements Wanxiang’s strong R&D and manufacturing capabilities, so we think adding A123 to our portfolio of businesses strongly aligns with our strategy of investing in the automotive and cleantech industries in the U.S.,” said Pin Ni, president of Wanxiang America. “We plan to build on the engineering and manufacturing capabilities that A123 has established in the U.S. and we are committed to making the long-term investments necessary for A123 to be successful.”

A123 Systems was founded in 2001 to commercialize new battery technology developed at the Massachusetts Institute of Technology. The company began selling its first products commercially in the first quarter of 2006. The company had an IPO in 2008 and filed for bankruptcy in October, 2012.

24M Technologies Launches and Obtains $10 Million in Series A Financing

24M Technologies announced its launch on Monday as a new venture focused on commercializing next-generation energy storage systems based on technology originated at A123 Systems and further developed at the Massachusetts Institute of Technology (MIT),  This technology combines attributes of rechargeable batteries, fuel cells, and flow batteries to enable scalable cost-effective, high-energy storage systems for emerging markets, including transportation and the electric grid.  In addition, 24M announced the following funding news:

A123 will hold an equity stake in 24M and a seat on the company's board of directors. A123 also expects to work closely with 24M to support its development and commercialization efforts.

"We are thrilled to have the backing and validation of leaders in industry, finance, government and academia in the pursuit of game-changing energy storage solutions," said Throop Wilder, president of 24M. "The U.S. needs an all-hands-on-deck approach to compete in global markets that are heavily subsidized by foreign governments. Our team has a proven track record of innovation and commercial success in energy and technology fields. By harnessing this entrepreneurial skill set, we will develop safe, reliable, scalable and ultra-low cost energy storage systems."

"This agreement with 24M highlights A123 Systems' substantial R&D pipeline and exemplifies our ongoing commitment to cultivating disruptive, innovative technologies while remaining focused on growing our grid and transportation businesses," said David Vieau, president and CEO of A123 Systems. "We believe that 24M's technology has the potential to reduce energy storage costs for transportation and grid applications, and we look forward to helping the company as it leverages our research innovations for the development of commercially viable systems."

"This is a very exciting project with huge potential to disrupt the existing energy storage market. We are thrilled to support 24M Technologies in this great endeavor," said Izhar Armony, general partner at Charles River.

"This is a unique founding team pursuing a disruptive technology," said Jeffrey McCarthy, general partner at North Bridge. "Dr. Yet-Ming Chiang, the lead inventor of the technology, is a renowned scientist and energy entrepreneur whom we have backed before. Yet, of course, continues to remain fully engaged with A123 in his capacity as a co-founder. Teaming with Throop Wilder, another proven entrepreneur with multiple technical and business successes whom we have also backed before, and Dr. W. Craig Carter, a world-renowned materials scientist, they have created exactly the kind of team required for winning outcomes."

A123 Systems Files Registration Statement with SEC for IPO; Discloses $102.1 Million in Additional Equity Financing

A123 Systems

A123 Systems, a company that develops and manufactures lithium-ion batteries and battery systems for the transportation, electric grid services, and portable power markets, announced in August that it filed a S-1 registration statement with the U.S. Securities and Exchange Commission relating to a proposed initial public offering (IPO) of up to $175 million of its common stock on the NASDAQ Global Market under the ticker symbol "AONE".  You can view this filing by clicking on the image below:

A123 Systems S-1

A123 Systems was founded in 2001 to commercialize new battery technology developed at the Massachusetts Institute of Technology. The company began selling its first products commercially in the first quarter of 2006.  The company’s revenue was $34.3 million for the year ended December 31, 2006, $41.3 million for the year ended December 31, 2007, and $10.3 million for the three months ended March 31, 2008.

A key source of A123 Systems’ revenue to date has been Black & Decker, to which A123 Systems has supplied batteries for their portable power tools.  The company also operates in other market segments, including transportation and electric grid services. A123 Systems has acquired a number of companies over the years including Hymotion.  The following video provides an illustration of some of A123 Systems’ technology in the transportation sector:

Investors in A123 Systems include General Electric, Procter & Gamble, Alliance Capital, Motorola, Qualcomm, North Bridge Venture Partners, Sequoia Capital, CMEA Ventures, FA Technology Ventures, OnPoint, Carruth Management, the Massachusetts Institute of Technology, and Desh Deshpande (A123 Systems’ board chair). 

In A123 Systems’ S-1 filing, the company stated that it raised $102,085,005 in equity financing (6,152,553 shares of Series E convertible preferred stock at $16.59 per share) after March 31, 2008.  The company also stated that it had received aggregate net proceeds of approximately $266.1 million since its founding from the financing activities of private placements of preferred stock, common stock, convertible promissory notes, demand notes, term loans, revolving credit facilities and other credit facilities.

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