I think you should fire this person immediately. Okay, maybe give him exactly one warning.
You’ll find someone else who really knows this stuff. No doubt about it. And firing one intransigent bully is a lot less painful than shutting down an entire division next year because he paralyzed your decision-making.
Deep technical competency is overrated compared with the ability to make excellent decisions and to create a culture where forward motion is valued and personal initiative is rewarded.
The good news is that the bully knows this, and the only reason he gets away with being a bully is that he thinks he’s got you bluffed. Call his bluff and odds are you’ll have a much more cooperative team, top to bottom.