The Australian government will spend nearly $500m to take majority ownership of a Canberra-based defence contractor that makes radar systems.
The deal to take CEA Technologies Pty Ltd into public hands will ensure “the continued development of Australia’s radar capability in an increasingly complex strategic environment”, the government says.
The staged deal begins in July when the commonwealth will gain a minority stake in the company, which employs 600 people.
The commonwealth will end up with a majority of the shares after 18 months, at which point CEA will become a government business enterprise.
The government has not published the price tag, but Guardian Australia understands the deal is worth almost $500m.
The deputy prime minister, Richard Marles, said the plans would ensure the company was “on the path to grow and develop over the long term, in order to meet the ongoing needs of Australia and its international partners”.
“Today’s landmark agreement secures the longevity of this Australian company and guarantees supply of critical radar systems for the ADF, now and into the future,” Marles said.
The defence industry minister, Pat Conroy, said CEA provided “critical capabilities for a number of our major naval surface combatants, amongst other projects, and plays a vital role in our national security”.
“The phased array radar capabilities within CEA are a critical sovereign capability and today’s agreement protects the incredible capability of the CEA workforce and their unmatched ability in the field of radar technologies,” he said.
The deal has been finalised just months after the Department of Defence announced that CEA Technologies had been awarded a $277m contract to provide advanced capabilities for electronic warfare.
But the government said the decision would have “no impact on procurement decisions by the Department of Defence” and the company would “continue to participate in the defence industry and pursue commercial, including export, opportunities”.
The company was expected to operate “as an independent for-profit company at arms-length from government”.
The plans were first revealed in government instruments registered on Wednesday evening by the finance minister, Katy Gallagher.
One of the documents said the plans would “enable the commonwealth to expand its sovereign defence capability through the interests held in CEA”.
When contacted for comment on Thursday, Gallagher said the company was “a longstanding and valued partner”.
She said the deal “strikes an appropriate balance between maintaining the capabilities and operational independence of CEA as a standalone company, and keeping Australians safe while achieving value for the taxpayer”.
CEA issued a statement saying the agreement “gives shareholders certainty and clarity about the future strategic direction of the company”.
The company’s chairman, Peter Robson, said he wanted to thank “the departing long-term minority shareholders for their unwavering support over the last four decades”.
The departing shareholders included the US firm Northrop Grumman, he said.
Guardian Australia understands CEA already had an unusual arrangement with the federal government because of the classified nature of the products it develops.
CEA’s only direct customer is the Department of Defence, and any goods or serves exported to Australia’s allies or partners is done via Defence.
Sources pointed to this “unique” relationship when asked why the government was now pursuing a majority stake in the company.
