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A123 appears to have found its way out of the financial hole it is in: arranging financing that will ultimately lead to selling a 80% stake of itself to the Chinese automaker Wanxiang.

Desperate situations call for desperate solutions. After the manufacturing error caused the massively expensive recall, A123 was on the ropes.
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So, the A123 bankruptcy auction went to a Chinese owned company, and the bankruptcy court approved the sale yesterday.

The auction happened last week:
A123 Systems, Inc. reached agreement on the terms of an asset purchase agreement with Wanxiang America Corporation through which Wanxiang would acquire substantially all of A123’s assets for $256.6 million. Wanxiang outbid a joint Johnson Controls and NEC offer and a bid from Siemens in an auction held on 6 December for the assets of the bankrupt Li-ion battery maker.

Based in Chicago, Wanxiang America has been in the automotive and industrial markets in the US since 1994 and currently has more than 3,000 employees in the US. It 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 US in 2012."

It's not a done deal yet, subject to approval of the Committee for Foreign Investment. One unit of A123 is already excluded: their business with the US government.

I wonder how much Wanxiang America is subsidized by the Chinese government.
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