Defence to acquire CEA Technologies

The Australian Government will acquire a major share in Australian defence radar systems manufacturer, Canberra-based CEA Technologies Pty Limited, in July this year in a deal reported to be worth nearly $500 million.

The deal to secure the leading-edge capability includes buying out Northrop Grumman’s 49% shareholding and will ultimately create a new Government Business Enterprise (GBE).

CEA designs and delivers systems to the Defence Force that are essential, and the purchase agreement ensures the continued development of Australia’s radar capability in an increasingly complex strategic environment and guarantees supply of critical radar systems for the ADF, now and into the future, said Minister for Defence Richard Marles.

“The approach the Commonwealth has taken, in partnership with existing shareholders, will ensure CEA is on the path to grow and develop over the long term, in order to meet the ongoing needs of Australia and its international partners,” he added.

CEA was recently awarded a $277 million contract to provide advanced capabilities for Australia’s electronic warfare ranges as part of Project Air 5349 Phase 6 – Advanced Growler. In AIR6500 Phase 1, CEA will design and deliver four active phased array sensors for Tranche 1 as part of the new Joint Air Battle Management System. CEA sensors will be delivered as part of LAND 19 Phase 7B, the Army-operated component of the Joint Integrated Air and Missile Defence (JIAMD) capability. CEA’s CEAFAR phased array systems are operational on the ANZAC Frigates, delivered under the Anti-Ship Missile Defence Upgrade and Advanced Air Search Radar programs. CEA’s phased array systems will also be supplied for the new Hunter Class Frigates.

“The Commonwealth’s staged investment in CEA, a longstanding and valued partner, 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,” said Minister for Finance, Senator Katy Gallagher.

From July 2023, the Commonwealth will hold a non-controlling shareholding in CEA for 18 months. After that time CEA will be majority owned by the Commonwealth and become a GBE.

CEA will continue to operate as an independent for-profit company at arms-length from Government.

The company’s Chairman, Mr Peter Robson AO, thanked the departing long-term minority shareholders for their unwavering support over the last four decades. In particular he singled out co- founder Mr David Gaul who has served the company in executive positions and as a valued Board member.

The enduring support provided by all shareholders and departing Board members, leave the company in a very good financial and operational state, he said, well positioned for future strategic growth, able to meet technology challenges and to deliver advanced capability systems to the Australian Defence Force and its allies.

The CEA Board, management and staff are supportive of the ownership changes and look forward to this new era of consolidated Australian shareholding and continuation of ‘business as usual’ for the company.

The agreement will:

• Allow the company to continue on its path to grow and develop the suite of products and services it provides with an acute focus on sovereign defence capability
• Preserve the culture of innovation to pursue commercial opportunities and further develop the technology, whilst maintaining a strong focus on national security
• Give the existing staff and investors in CEA certainty and clarity about the future.

The Australian Government says this investment is testament to all that has been achieved by the workforce over the past 40 years. The cutting edge approach of CEA’s 600-strong workforce to designing and delivering essential defence capabilities will only be further strengthened through sovereign ownership.

“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,” said Minister for Defence Industry Pat Conroy

This decision has no impact on procurement decisions by the Department of Defence. It is expected that as a GBE, CEA will continue to participate in the defence industry and pursue commercial, including export, opportunities.

The Minister for Defence and Minister for Finance will be joint shareholder ministers with responsibility for overseeing the Commonwealth’s investment in CEA.