The boards of Switzerland-based ABB (NYSE:ABB) and U.S.-based Power-One (NASDAQ:PWER.DL) have come to terms on an agreement in which ABB will pay $6.35 per outstanding share of Power-One stock to acquire the company, valuing the deal at approximately $1 billion, the companies announced today.

ABB plans to utilize Power-One's position in the rapidly growing solar inverter market, which the companies deem the "intelligence" behind solar photovoltaic (PV) systems. In 2012, Power-One generated earnings of about $120 million, on approximately $1 billion in revenues. Power-One currently employs nearly 3,300 people, primarily located in China, Slovakia, Italy, and the U.S., and it will be integrated into ABB's existing Discrete Automation and Motion unit. ABB operates in more than 100 countries, employing a total of 145,000 globally, including nearly 20,000 in the U.S.

"The combination of Power-One and ABB is fully in line with our 2015 strategy and would create a global player with the scale to compete successfully and create value for customers, employees and shareholders," ABB CEO Joe Hogan said.

The agreement between ABB and Power-One is structured as a merger, and is subject to shareholder approval and standard closing conditions. ABB will finance the deal using existing funds, and expects it will close by the second half of 2013.

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Fool contributor Tim Brugger has no position in any stocks mentioned. The Motley Fool owns shares of Power-One. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.