Wanxiang won court approval to buy most of the assets of A123 Systems, the failed electric-car battery maker backed with US government funds, for about US$256.6 million.
Bankruptcy Judge Kevin Carey approved the sale, which has raised concern from some lawmakers, at a hearing in Wilmington, Delaware, on Tuesday, saying "the auction was robust, the price is adequate".
The deal is still subject to review by the Committee on Foreign Investment in the US, a federal interagency group led by the Treasury Department that reviews mergers and acquisitions for national security concerns when a takeover may give a foreigner control of a US company.
Wanxiang, China's biggest car-parts maker, will acquire substantially all of A123's assets, including its car, grid and commercial business.
A123 also received approval to sell its government business to Navitas Systems for about US$2.25 million.
"Given the fact that we more than double where we were at the beginning of the auction, I think everyone was pleased," A123's lawyer, DJ Baker, told the court. A123, which was awarded a federal grant of as much as US$249.1 million, held an auction last week where Wanxiang beat a joint bid from Johnson Controls and Japan's NEC.
Johnson, the lead bidder for the auction with a US$125 million offer for the automotive business, drew criticism from the unsecured creditors' committee, which said the jilted bidder was attempting to undermine the sale.
"We have learned that lobbyists have been engaged" by Johnson to persuade CFIUS to reject the acquisition, said William Baldiga, a lawyer for the creditors' committee.
The creditors asked the court to set aside a US$5.5 million payment Johnson was set to receive for being outbid at the auction and its auction-related expenses.
"I'm troubled by the suggestion that someone who participated in the auction may already be working against the sale," Carey told lawyers before approving the creditors' committee's request.
A lawyer for Johnson, Joshua Feltman, said he was not aware of any attempts by his client to thwart the deal. He said members of Congress preferred that Johnson buy the assets, and the company should not be punished for siding with a delegation from Michigan, where some of A123's assets are based.
The US$5.5 million will be put into escrow until the committee completes its investigation or CFIUS approves the sale to Wanxiang. The initial 30-day period of CFIUS's review will end today, which will be followed by a 45-day investigation.