Albert Le Blond, who founded the Wear Dockyard Group in 1974, is selling the company to quoted shipyard group, Cammell Laird Holdings, for pounds 33m.
The takeover brings together some of the most famous names in British shipbuilding. Cammell Laird Holdings owns the eponymous yard on Merseyside after rescuing it from closure under its former owners VSEL.
Mr Le Blond's group includes Hebburn shipyard on the Tyne, bought from the receivers of Swan Hunter in 1994, and the Pallion yard in Sunderland, formerly part of North East Shipbuilders Limited.
Cammell Laird said the merger would be a good geographic fit and would enable the group to reduce purchasing costs and undertake larger refit projects in the offshore market.
The group has not ruled out re-entering the new-build market for specialist ships such as research and seismic vessels.
Mr Le Blond, who began the Wear Dockyard Group with one small derelict dry dock in Sunderland, owns 90 per cent of the business jointly with his wife. Cammell Laird is paying for the business with pounds 20m in cash and issuing a further pounds 12.5m worth of shares to Mr Le Blond, who will end up with 10 per cent of the enlarged company.
Although he is 63, Mr Le Blond does not intend to give up work. He said the bulk of the proceeds would be reinvested in shares and property while he learns to speak French and catches up on some reading.
The parent company of Wear Dockyard Group, ALB Holdings, had pounds 44m turnover last year and employs 1,000 people at four dry docks in the Tyne Tees and Wear regions.
The acquisition will more than double the size of Cammell Laird, which made pre-tax profits of pounds 4m on sales of pounds 32m last year. It will be partly funded through a one-for-eight rights issue to raise pounds 13.2m.