China's largest maker of auto parts won a politically sensitive auction for A123 Systems Inc., a bankrupt maker of batteries for electric cars that was funded partly with U.S. government money, A123's investment banker said on Saturday.

Timothy Pohl of Lazard Freres said Wanxiang Group Corp.'s bid of about $260 million topped a joint bid from Johnson Controls Inc. of Milwaukee and Japan's NEC Corp. for the maker of lithium-ion batteries.

Wanxiang, one of the largest nongovernment-owned companies in China, has annual revenue of more than $13 billion and supplies auto parts to many of China's largest automakers.

Wanxiang's approach for A123 had stirred a political storm and one U.S. politician was quick to warn about A123 and its sensitive, U.S. taxpayer-financed technology falling into the hands of a Chinese company.

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"Given the thin line between Wanxiang and the Chinese government, I am concerned about the government of China having access to sensitive technologies being used by our military forces," said Rep. Bill Huizenga, a Republican from Michigan, where A123 has plants.

The sale did not include parts of A123's business that work with the U.S. Defense Department, a source close to the deal said. The U.S. government must give its consent before its $249 million grant to A123, made to promote clean energy, can be transferred to a new owner. -- Reuters