A123 Systems fka AONEQ

[ice1234]

STRONG BUY -The Deal of a Lifetime November 2, 2012

The Deal of a Lifetime

You know what they say: One man's loss in another man's gain. And boy is that the case with A123 Systems and Johnson Controls.

While pundits and spin doctors pumped out the rhetoric in an effort to either capitalize on the A123 news or run damage control, Johnson Controls pulled off what many now believe was the deal of a lifetime.

With A123 in full desperation mode, Johnson Controls was able to swoop in and buy the struggling company's assets (pending approval), which included the company's high-performance battery technology, its two Michigan manufacturing facilities and a factory in China, as well as its stake in a joint venture with Shanghai Automotive.

And Johnson Controls got all of this for the low, low price of $125 million. It's a very sweet deal.

Interestingly, $73 million in financing was also ponied up to allow the company to maintain operations.

Despite my continued frustration over the fact that A123 has burned through 132 million of our taxpayer dollars (the entire $249 million has not been depleted), at least the company's government-funded technology and advances won't go gently into that good night, now that Johnson Controls has jumped in the driver's seat.

Did Someone Say "Jobs"?

There was a great piece on CNN Money this week about the Johnson Controls acquisition, in which senior editor Brian Dumaine wrote:

By taking over A123, Johnson Control will help slow the export of intellectual property overseas. China recently invested in Boston Power, a Massachusetts maker of lithium-ion batteries. Earlier, a Russian investor bought Ener1, another struggling U.S. battery company. Michael Lew, an energy analyst at Needham & Company in New York explains it this way: "Johnson Controls is America's best hope to have a thriving battery industry. If this industry is going to be a prolific job creator in the future, it makes sense to have a major presence here."

There's also a national security angle. As the U.S. military gravitates more toward electrified vehicles and naval vessels, including submarines, does the nation want this key technology to be solely in the hands of foreign nations?

I think Dumaine hit the nail on the head. Truth is a gradual transition to vehicle electrification is happening.

It won't happen overnight. If we're lucky, electric vehicles should reach a one to 1.5% penetration by 2020 ...

But it is happening.

Because when you clear away the smokescreens of empty rhetoric and partisan buffoonery, there's no denying the fact that electric cars can absolutely help us combat the growing threat of Peak Oil and the national security vulnerabilities that come with it.

As an investor, I currently have no direct exposure to the electric vehicle market. Because the truth is of the few pure plays that are still around, none offer the kind of safety or steady growth I'm looking for as we head into 2013.

But rest assured, the long view on electric vehicles is a promising one.

If you're looking for exposure to this space, but don't want the risk that comes with most of these younger, smaller niche players, you can always consider a few of the global power players that are increasingly becoming heavily invested in the electric vehicle space — like Johnson Controls, GE (GE), Siemens (SI), Eaton (ETN), and Schneider Electric (SBGSF.PK).

Just keep in mind the development and integration of electric vehicles will be marathon, not a sprint.

Invest accordingly.

http://seekingalpha.com/article/972341-who-s-profiting-from-obama-s-bankrupt-battery-company?source=kizur


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