A123 To Expand In Westborough
A123 Systems, the Watertown-based lithium ion battery manufacturer, is coming to Westborough.
The company finalized a lease on Monday for 67,000 square feet of industrial space at 155 Flanders Rd. The lease was confirmed by both Andy Chu, vice president of marketing for the company, and Marc Verreault, senior vice president with Carruth Capital in Westborough, which owns 155 Flanders Rd.
Waltham-based T3 Advisers represented A123 in negotiations for the 10-year lease.
A123 already has a research and development site in Hopkinton, but the new Westborough site will be used by the company's energy solutions group, and will host research, development and manufacturing operations, according to Chu.
A123 has about 1,600 employees and makes a variety of batteries and energy storage devices, including batteries that are designed for use in electric cars.
Regional Reaction
"This is terrific news for Westborough and the whole region," said Paul Matthews, executive director of the 495/MetroWest Partnership, which advocates for the region. "I think this is one more win for the region in terms of cutting edge industries that have tremendous long-term economic upside locating here."
A123, which was founded in 2001, garnered national attention last fall when it raised more than $350 million from an initial public offering. The stock opened at $17 per share and traded as high as $25 per share. However, its share price has dropped by nearly 65 percent since that peak to just under $9 per share.
Michael Lew, a research analyst with Needham & Co. in New York, acknowledged that recent "financial markets have made it tough," but said A123 is still well positioned.
"There is a big push right now globally toward energy efficiency and electric vehicles, so this company is definitely playing in a growth sector," he said.
In the first quarter of the year A123 posted a $2 million loss, which was down significantly from the $1.8 million profit the company made during the same period a year earlier. While the company swung to a loss during the first quarter, its revenues climbed year-over-year by 5.6 percent to $24.5 million.
Needham & Co. has a hold recommendation on the company's stock, which Lew said is in part due to a pending intellectual property lawsuit. A123 is being sued by a University of Texas researcher who claims patented the company's lithium ion phosphate battery technology in the 1990s, Lew said.
While there is strong growth potential for A123, the entire market of next-generation batteries is somewhat uncertain, according to Lew.
"There's been a lot of discussion about these new-age power sources, but everyone's still sort of waiting to see electric cars on the road," he said.
Verreault said Carruth and A123 worked with the local electrical utility, National Grid, to increase the power capacity of the facility to accommodate A123's move.
A123's storage technology has many applications, including in the electric car arena as well as back up storage for power plants.
In April, the state announced a $5 million forgivable loan to the company to help expand its operations in Hopkinton, including adding 250 jobs at that site. The company said at the time it was planning to invest $80 million in the state by 2014.
The company has also received a $250 million federal grant from the Department of Energy to build advanced battery production facilities in the United States.
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