Weir Group has sold its defence and nuclear specialist Strachan & Henshaw to Babcock International for around £65m.

The deal follows Babcock's purchase last year of Devonport dockyard, a major customer of Strachan & Henshaw, from a consortium in which Weir had a 24.9% stake.

Bristol-based Weir Strachan & Henshaw, at times one of the jewels in Weir's crown, is a leading engineering designer and project manager for the defence and nuclear industries, with outposts in Australia, Canada and the US. Its customers are led by BAE Systems and the Ministry of Defence.

Revenue last year rose by 9% to £52m, but after a 25% jump in 2006, profits were flat at £4.1m, which means Babcock is paying some 16 times earnings.

Glasgow-based Weir acquired the subsidiary in 1990, when it raised £30m in a rights issue to fund the deal in an era of expansion under former chairman Lord Weir and chief executive Ron Garrick.

But the current chief executive Mark Selway said yesterday: "The Weir Group today is focused on the supply of speciality equipment and services for the oil and gas, mining, and power and industrial sectors, which accounted for almost 90% of the group's revenue in 2007.

"This transaction is consistent with our strategy to realise value from our non-core assets and complements the disposal of Weir's interest in Devonport Management Limited in the second half of 2007."

He said the cash proceeds would be used to continue to develop Weir's activities in specialist higher-margin businesses in the sectors where the group had established its most important presence.

Last July, the group said that due to unprecedented order growth in the previous two years, order input in the first half at Weir Strachan & Henshaw was down by almost 60%. In 2006, the subsidiary won a £37m contract to engineer weapons-handling systems for the Spanish Navy's submarine fleet.

Over the past two years Weir has said the "slowdown in the Iraq market" meant the company was "refocusing on the higher-growth areas of Saudi Arabia and Dubai".

Two years ago, Selway was still expecting the company's contract wins to "provide a further catalyst for growth in our defence, nuclear and gas division in 2008 and beyond".

Weir Strachan & Henshaw is one of four companies involved in the decommissioning and site restoration of Dounreay in Caithness. In 2000 its parent sold the company's materials-handling division to Swedish group Svedala for £2.5m.