Chemring has announced the sale of Chemring Marine to Drew Marine for £32m, payable in cash.
Completion, which is conditional upon regulatory approvals and subject to a working capital adjustment, is expected by the end of July.
The proceeds after costs will be used by the group to reduce net debt, initiate a share buy-back, and to fund existing pension liabilities of around £2m.
Chemring Marine is a supplier of marine pyrotechnic distress signals to the commercial and leisure marine markets, but is no longer considered to be core to Chemring and its wider international defence strategy.
In the year ended 31 October 2011, the company generated revenues of £21m, an operating profit of £6m and had gross assets of £17m.