Qinetiq, formerley DERA, the Defence Evaluation and Research Agency, is to be sold off on the stock market as a public company.
The first big chunk of it has already been sold.
The buyer is Carlyle Group, one of the world's leading private equity firms, which has acquired a 33.8% interest in the company. A further 3.7% of the shares will be made available for the employees.
The Ministry of Defence retains a 62.5% stake in the business, but the MOD plans to sell its entire stake within three to five years through a flotation on the stock market.
Aldershot MP Gerald Howarth, frontbench spokesman on Defence, called it a "botched deal" and said it was a "poor deal for the taxpayer."
He stated: "The government's sale of a controlling interest in Britain's world class defence research company for less than £200 million represents a poor deal for the taxpayer.
"Along with the Defence Select Committee, we have been opposed to this botched privatisation. Two years ago there was talk of valuing the company at £1,000 million. Now the Government has sold control of the business for a mere £150 million.
"There remain a number of questions which need to be answered:
l Have the problems concerning intellectual property rights been resolved?
l If control of the company has been passed to Carlyle and Qinetiq, will Ministers remain accountable for a business in which they maintain a majority shareholding?
l Will the cash arising from the sale be resolved?
l Why are the employees being offered so little?
"The Conservatives recognise the great strengths of Qinetiq's technology base and we want the company to prosper. However, we believe the Government has seriously mishandled the management of a key British defence asset."
Sir John Chisholm, Qinetiq's chief executive, commented: "We can now be even more confident of achieving our ultimate goal of moving from being a European leader to a global technological solutions provider for our diverse range of customers.
"Carlyle's investment secures a bright, long term future for our business, our employees and our customers."
Qinetiq, one of Europe's largest science and technology organisations, employs 9,000 people including many leading scientists and has a turnover of about £800 million.