The move is part of Vickers' strategy to focus on its marine engineering business.

But some analysts worried that the company had overpaid for the purchase and would be a less attractive takeover target of its own.

Change of strategy

In June the group controversially sold its Rolls-Royce Motor Cars business to German car giant Volkswagen.

Vickers has also recently announced it was cutting 600 jobs including the closure of its tank manufacturing facility in Leeds.

Vickers already owns the Swedish ship engineers Kamewa group and has marine businesses in Scotland and Newcastle.

Baron Buysse, chief executive of Vickers, said: "We are now well equipped to uplift our financial performance and to meet the future with confidence and strength."

He added there would be room for some rationalisation between the various marine companies included in the Vickers group. Ulstein has operations in Scotland, close to Vickers' existing business.

However no further job cuts are envisaged.

All at sea

The acquisition will make Vickers a major player in the marine engineering sector with combined sales of £500m.

As part of the deal Vickers is selling off Ulstein's shipbuilding business.

Idar Ulstein, chairman of Ulstein, added:"Over the last five years, and particularly since our flotation (in 1997) we have invested substantial resources to build Ulstein into a truly integrated ship design and systems business."

Shares tumble

However shares in Vickers tumbled on the London stock market.

Analysts point out that the acquisition reduces the probability that Vickers will be taken over, as it has now spent its cash pile.

There are also worries that Vickers has overpaid for the Norwegian business.

Vickers shares had fallen from 183.5p to 176.5p by 1250 GMT.