New Delhi, Aug. 5 -- Australia said Tuesday it accepted a Japanese company's bid for a lucrative and hotly contested contract to build Australian warships, expected to be worth 10 billion Australian dollars ($6.5 billion).

Mitsubishi Heavy Industries' Mogami-class frigate won the deal over rival Germany's MEKO A-200 from Thyssenkrupp Marine Systems. Japan's government lobbied heavily for the deal after missing out on Australia's submarines contract to a French company in 2016.

"This is clearly the biggest defense industry agreement that will ever have been struck between Japan and Australia," Defense Minister Richard Marles told reporters when he announced the deal Tuesday. "In fact, it's really one of the biggest defense exports that J...