High-end British security firm AEP Networks is being bought by US defence contractor Ultra Electronics for an upfront sum of $57.5 million (£36.9 million).

The US firm will sweeten the deal with a further $17.5 million at the end of 2011, depending on AEP's continued performance.

For its money, Ultra will get its hands on a Hertfordshire-based company with valuable contracts selling remote access and encryption gateways, communications systems for distributing security keys over GSM, satellite and ISDN, and a cloud thin-client service called Cloud Protect.

In a changing defence world, the addition of a computing wing to Ultra's line-up ticks a lot of boxes, including cloud services, encryption and key management, which come with the respected British GCHQ CESG accreditation on top of FIPS-140 Level 4, and CAPS. Three quarters of AEP's sales are in EMEA, offering Ultra geographical diversification.

"AEP provides important complementary technologies and products to advance Ultra?s strategy in the growing cyber security domain," commented Ultra CEO, Rakesh Sharma.

"AEP is a technology-rich company with strong intellectual property and wide global reach, operating in a fast-growing market place. AEP?s encryption and network communication capabilities have strong market-facing synergies with Ultra?s CIS, 3eTI, DNE, ProLogic and TCS businesses," he said.

AEP will become part of Ultra's Tactical & Sonar Systems division