ABB Ltd (NYSE:ABB), the Swiss engineering conglomerate, agreed to buy US renewable energy company Power-One for $1.03 billion in cash, in a move to boost its position in solar energy.

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The offer price is 57 percent above Power-One’s closing price on Friday, boosted by $266 million in net cash held by debt-free Power-One. Under the terms of the deal, the Swiss group will pay Power-One’s shareholders $6.35 a share.

“Solar PV is becoming a major force reshaping the future energy mix because it is rapidly closing in on grid parity,” said Joe Hogan, ABB’s chief executive

Power-One is the second largest maker of solar inverters that are used to channel solar energy into electricity grids. Ranging from residential to utility applications, Power-One’s solar inverters broad global manufacturing footprint, and also has a power solutions portfolio that is adjacent to ABB’s power conversion business, ABB said in a statement.

Subject to shareholder and regulatory approval, the deal is expected to close in the second half of 2013.

“The combination of Power-One and ABB Ltd (NYSE:ABB) is fully in line with our 2015 strategy and will create a global player with the scale to compete successfully and create value for customers, employees and shareholders,” Mr. Hogan said.

Mr Hogan acknowledged that ABB Ltd (NYSE:ABB) had been tracking the photovoltaic market for the past three years and was confident that it understood it.

“There are going to be two big disruptors in the energy industry in the next 10 years: shale gas and PV,” said Hogan

Power-One’s sales are expected to hit about $891m in 2013, while ABB Ltd (NYSE:ABB) currently has revenues of around $100m in this area.

Shares of ABB Ltd (NYSE:ABB) closed at 19.93 Swiss francs on Friday, up 6.3 percent so far this year.

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