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A123 Systems Inc., a developer of Nanophosphate lithium-iron-phosphate batteries and systems for electric vehicles and grid energy storage, has announced that it plans to sell substantially all of its assets to Chicago-based Wanxiang America Corp. for $256.6 million. John Controls, which announced its plans to acquire A123 in October, declined to match Wanxiang's higher bid and withdrew itself from the bankruptcy auction.

The Wanxiang agreement was reached following an auction conducted under the supervision of the U.S. Bankruptcy Court for the District of Delaware. A hearing at which A123 and Wanxiang will seek the required court approval of the sale is scheduled for Tuesday.

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.

The completion of the sale to Wanxiang is subject to certain closing conditions, including approval from the court as well as from the Committee for Foreign Investment in the United States.

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