Software supplier Detica has agreed to a takeover by BAE Systems for more than £500m.
The Guildford-based group generates around two-thirds of its revenues from national security, with the rest coming from telecoms and financial services.
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Tom Black, Detica CEO, said further development of the business under the ownership of BAE Systems will be attractive for both customers and employees.
BAE Systems is Europe's biggest defence company. Its chief operating officer, Ian King, said the acquisition "will combine Detica's well established customer relationships and technical capabilities together with our system integration capabilities."
Clive Forestier-Walker, Numis Securities analyst, said, "It's a strategic deal at a full price."
In a separate statement, Detica said that its sales in the three months to June 30 rose by 14% on the same period in the pervious year, boosted by government contracts. "Strong demand in our government markets has more than offset the continuing weakness in our financial services unit," it said.