The Japanese electronics giant, already the top shareholder in Clarion with a 14.4 percent stake, said it had signed a basic agreement with the company to turn it into a subsidiary.

Hitachi, heading for a big loss this year, expects the deal to bolster its automotive equipment business as it goes head to head with rivals such as Denso Corp to develop increasingly sophisticated electronic systems for cars.

Hitachi expects to spend at least 23.15 billion yen to raise its stake in Clarion to just over 50 percent but will buy all shares tendered from October 25 in response to its bid of 230 yen per share.

The directors of Clarion -- once a Nissan affiliate until the automaker sold off its stake -- expressed their approval for the take over at a meeting earlier Wednesday, Hitachi said.

"Hitachi's aim is to develop its business further by leveraging Clarion's strength's under the umbrella of the Hitachi Group," the bidder said in a statement.

"Hitachi is channeling resources into its automotive systems business, which includes car information systems, to strengthen it as one of the core businesses of the Hitachi Group."

With automakers racing to develop next-generation vehicles that fuse driving, steering, braking and communicating, car information systems promise to be a fast-growing market, the company said.

Hitachi plans to make its Xanavi Informatics business a subsidiary of Clarion after acquiring the car navigation system maker.

Automobiles are becoming 'smarter' with more and more electronics equipment, such as car navigation systems, and Hitachi has singled out this area for priority investment.

Hitachi warned in September that it expected to fall deep into the red in the year to March with a net loss of 55 billion yen because of repairs to faulty turbines it sold and falling prices of consumer electronic goods.

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