Hitachi Ltd. said Monday it has agreed to purchase the power grid business of Swiss engineering group ABB Ltd., initially investing $6.4 billion for an 80.1 percent stake before a complete takeover in the future.

But the Japanese technology conglomerate also indicated that it would freeze a nuclear plant project in Britain due to rising costs, apparently urging the British side to increase commitment through measures such as investment in the project.

[Getty/Kyodo]

The deal, Hitachi's biggest-ever acquisition, would strengthen the Japanese electronics maker's competitiveness in the power transmission business against General Electric Co. and Siemens AG.

Hitachi said it will close the deal to acquire the 80.1 percent stake around the first half of 2020. After the transaction is settled, Hitachi will buy up the remaining stake in four years or later.

The acquisition marks a key step in Hitachi's renewed efforts to expand overseas operations, after streamlining its group businesses following the 2008 global financial crisis.

Under its three-year business plan through the current financial year ending March, Hitachi aims to complete reforms and pursue global expansion through mergers and acquisitions.

"Today's agreement between ABB and Hitachi is a significant turning point in the global power and energy markets at a time when digital technology is fundamentally changing our society and the pattern of energy demand and supply is diversifying," Hitachi President Toshiaki Higashihara said in a statement.

Power and energy businesses are among the core operations that Hitachi has been focusing on. Using internet of things technology for the online connection of a variety of devices, Hitachi plans to develop a network for efficiently distributing electricity generated by renewable sources, which are dependent on weather conditions.

The global power grids market is expanding at an annual rate of 4 percent and is expected to exceed $100 billion by 2020, Hitachi said.

Hitachi and ABB agreed that the Swiss group's power grid business is worth $11 billion and the purchase price was set after deducting debt.

Separately, Hitachi Chairman Hiroaki Nakanishi said the company has told the British government it would be difficult to continue a nuclear plant project in Wales due to swelling costs.

"We have told the British government that we can't go any further" with the current construction plan, Nakanishi said at a regular press conference as head of the Japan Business Federation.

A Hitachi executive said the company will likely make a final decision in January on whether to continue with the project. It had initially planned to decide within next year.

If Hitachi freezes the 3 trillion yen Wylfa Newydd plant construction, it will mean all of the overseas nuclear projects promoted by the government of Prime Minister Shinzo Abe as part of his growth strategy have faltered.

The company has contacted prospective investors in the project, but little progress has been made amid concern that costs will swell further, according to sources close to the matter.

Hitachi has been asking London for direct investment in the project and increased purchase prices for the electricity to be generated by the plant.