The two governments agreed to the terms on the grounds that Germany would underwrite a portion of the cost. Christian Schmidt, German secretary of state for defense, told The Jerusalem Post the sale was a demonstration of Germany's commitment to Israel's security.
"The security of the State of Israel is a German concern and this will not change," Schmidt said.
Schmidt told the newspaper Germany is looking to increase defense cooperation with Israel.
Germany has already provided Israel three Dolphin-class submarines, two of which were donated after the First Gulf War. Israel and Germany split the cost of the third. All three carry cruise missiles armed with nuclear warheads.