The deal will see MHI invest EUR 300 million, with EUR 100 million up front and the remainder dependent upon the V164 hitting certain milestones.
In return, Vestas will make the V164-8.0 MW, its V112-3.3MW offshore order book, existing offshore service contracts and around 300 employees part of the joint venture.
Currently, ownership is 50:50. However, MHI has an option to acquire 51% of the company.
In a statement, Vestas said the it would concentrate on the development of the V164 and the V112 order book. But at a later date, it may seek to incorporate the hydraulic technology used in MHI's 7MW SeaAngel turbine into the Vestas machine.
The SeaAngel turbine will not be part of the joint venture and will continue to be developed independently by MHI.
The joint venture will be based in Aarhus, Denmark. MHI executive senior vice president and head of power systems Masafumi Wani will be the joint venture's chairman. Vestas CEO Anders Runevad will be vice chairman and current president for Vestas Asia Pacific and China, Jens Tommerup, will become CEO.
There had been speculation whether talks were still ongoing between the two companies, as there had been little comment from either since Vestas' initial announcement that talks were under way.
A week prior to this announcement, Vestas chairman Bert Nordberg told Danish newspaper Berlingske that he was working to secure a single partner prepared to take a 10-20% stake in Vestas and an active role in the business.