ABB says it has reached an agreement to divest its remaining 19.9% stake in the Hitachi Energy joint venture that was formed from ABB’s Power Grids business in 2020 to Hitachi, Ltd.

Hitachi has exercised its call option that was agreed between the parties in December 2018, agreeing to pay $1.679 billion to acquire the minority stake.

The companies have agreed to settle remaining obligations relating to the original transaction, and ABB will continue to provide transition services to Hitachi Energy for it to fully separate from ABB’s systems, ABB says.

ABB does not expect to record any significant gain or loss as a result of the sale, expecting net positive cash inflows of approximately $1.425 billion upon closing of the sale.

The transaction is subject to regulatory approvals and closing is expected to happen in the December quarter of 2022.

Timo Ihamuotila, Chief Financial Officer of ABB, said: “We are delighted to have agreed on the final part of the transaction earlier than expected and on favourable terms. This will further strengthen our balance sheet and give us additional flexibility in our capital allocation decisions.”

Yoshihiko Kawamura, Executive Vice President and Executive Officer, CFO of Hitachi, Ltd., and the Chair of the Board of Hitachi Energy, said in a separate press release: “We are pleased with the progress of Hitachi Energy and we look forward to supporting the Hitachi Energy 2030 Plan, as announced during Hitachi Investor Day 2022.”

Hitachi Energy says it is making good progress with its portfolio offering that is strengthening, expandin, and evolving the power system supporting customers and partners across the entire lifecycle to enable a sustainable, flexible and secure energy system. It says it is also well-positioned to accelerate the growing electrification of transportation, industry and building sectors with its long-term Hitachi Energy 2030 purpose-driven growth plan.