Swiss industrial group ABB (ABBN.VX) is to buy U.S. solar energy company Power-One Inc (PWER.O) for about $1 billion, betting that growth in emerging markets will revive a sector ravaged by overcapacity and weakening demand in recession-hit Europe.

The world's biggest supplier of industrial motors and power grids said on Monday it had agreed to pay $6.35 per share in cash for Power-One, the second-largest maker of solar inverters that allow solar power to be fed into grids.

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. Stripping out its cash pile, Power-One's enterprise value stands at $762 million, valuing the bid at a more modest 6.4 times 2012 core earnings.