The sum was paid in cash on completion, with a further £100,000 due if financial targets are met.

The acquired business comprises a range of software products, including the Universal Video Management System (UVMS) which is used in casinos, train stations, arenas and shopping centres. The division made a £400,000 profit in 2006 from a £1.8 million turnover and will now trade as part of BAE’s Integrated Systems Technology operations.

Petards’ directors decided to sell the business following a change in strategy. The company will now focus its operations on a limited range of technologies and markets, with some of the proceeds of the sale used to reduce group debt.

Under the terms of the deal, Petards will continue to provide the UVMS in North America through a licensing arrangement with BAE Systems. It has retained its other security products, including the Hawk camera, which is used for licence plate recognition, and its Swift wireless cameras.

BAE’s systems are built for air, land and naval forces as well as commercial operations, such as IT and customer support services. The group has 96,000 employees around the world and reported sales of £15 billion in 2006.

Middlesex-based Petards, which has two sites in the US, made a profit of £8.4 million from revenue of £23.2 million in the year to January 2007.