Electronics and machinery giant Hitachi Ltd. has completed the acquisition of a power grids company carved out from Swiss heavy machinery maker ABB Ltd.
Hitachi said Wednesday it spent $6.85 billion, or ¥740 billion, to buy an 80.1 percent stake in the power grids company, now named Hitachi ABB Power Grids Ltd.
The investment will be expanded further to ¥1 trillion as Hitachi aims to make it a wholly owned subsidiary to ramp up its global power grids business.
The power grids market has big potential for growth as the use of renewable energy, such as solar power, is expected to spread further.
Toshikazu Nishino, Hitachi executive vice president responsible for its energy business, doubles as chairman of Hitachi ABB Power Grids. Based in Zurich, the company started business Wednesday.
With the new company, Hitachi hopes to develop power grids with an advanced supply-demand balancing function for stable power supply by utilizing its internet of things, or IoT, technology.
Hitachi plans to acquire the remaining 19.9 percent stake in the new company as early as 2023.
ABB’s power grids business earned annual revenue of some ¥1 trillion, making it the largest of its kind worldwide.
Hitachi agreed with ABB on the acquisition in December 2018.