Johnson Controls has officially withdrawn from the bankruptcy auction to acquire portions of A123 Systems when it declined to match a higher bid submitted by Chinese auto parts maker Wanxiang Group.

In October, it was initially reported that auto parts maker Johnson Controls was set to buy A123’s auto business for US$125 million.

As such, A123 has announced that Wanxiang’s bid of US$260 million has been selected as the best offer for the total company over the competing complementary bids by Johnson Controls for the automotive and government assets and NEC, which bid for the grid and commercial assets.

The purchase may include assets such as A123’s automotive segment as well as energy-grid storage and commercial businesses. In addition, A123’s stake in a JV with Shanghai Automotive Industry Corp (SAIC) is also under consideration.

The final sale to Wanxiang is subject to approval by the bankruptcy court, as well as to a review by the Committee for Foreign Investment in the United States (CFIUS) and approval by the US government.