Wanxiang Surges on Agreement With A123: Shenzhen Mover
(Corrects to show shares rose by the most since Nov. 14 in second paragraph of story originally published Aug. 9)
Wanxiang Qianchao Co. (000559) surged the most in nine months in Shenzhen trading after its parent signed an agreement to potentially takeover A123 Systems (AONE) Inc., a U.S. maker of rechargeable automobile batteries.
The stock rose by the 10 percent daily limit to 5.02 yuan, the biggest one-day percentage gain since Nov. 14. China’s benchmark Shanghai Composite Index gained 0.6 percent.
A123 Systems said yesterday it signed a non-binding agreement under which Wanxiang Group Corp. could invest as much as $450 million in the Waltham, Massachusetts-based company and obtain up to an 80 percent stake in the battery maker. The agreement would give Wanxiang Group, China’s largest auto- components producer, technology needed for electric cars and help it expand its businesses in the U.S.
The memorandum of understanding is “the first step toward a longer-term agreement through which we plan to build on the foundation A123 has established in the U.S.,” Lu Weiding, Wanxiang Group’s chief executive officer, said in a statement.
After the agreement was announced yesterday, A123 rose 6.4 percent in New York trading, reducing the stock’s decline this year to 69 percent. The shares have fallen after A123 in March recalled batteries that made a Fisker Automotive Inc. car shut down in a Consumer Reports test and the company in May reduced its estimates for 2012 revenue.
Yesterday’s announcement also prompted a Florida lawmaker, representative Cliff Stearns, to say the agreement with Wanxiang raised national security concerns.
To contact Bloomberg News staff for this story: Raymond Liu in Beijing at email@example.com