Hitachi Ltd.'s agreement to buy the rail signaling business of Italy's Finmeccanica SpA in its largest overseas purchase ever will boost the company's European manufacturing base, increasing competition for the train units of Siemens AG and Alstom SA.
The European train-makers posted stagnant profits in recent years amidst rising Asian competition and constrained public investments in their home markets.
Hitachi, which builds key parts of Japan's bullet trains, is seeking growth abroad and European orders for express and commuter trains.