Gucci-owner Kering plans to spin off German sports brand Puma to the French conglomerate`s shareholders to focus squarely on its luxury brands.
Kering said on Thursday it planned to distribute 70 percent of Puma shares to its investors, leaving it with only a 16 percent stake, confirming an exclusive Reuters report.
Puma shares were down 4.4 percent at the close as some investors worried about the company losing a powerful backer. Kering stock was down almost 1 percent.
The deal comes after a recent turnaround at Puma, which struggled for years following Kering`s 5.4 billion) purchase in 2007.
The French firm, meanwhile, has long wanted to focus purely on its high-margin luxury business, where it rivals larger groups such as French conglomerate LVMH.
"We found ourselves in a sort of imbalance, linked to the outperformance of the luxury sector," Kering`s finance chief Jean-Marc Duplaix told journalists, adding the group would also look at options to shed its remaining sportswear label, Volcom.
Kering is a little more than 40 percent controlled by France`s Pinault family, which would receive about 29 percent of the sporting goods company, while Puma`s free float would stand at about 55 percent.
The French company was retaining a stake in Puma to reap some benefits from the brand`s recovery, Duplaix said, as Kering will make no cash gains from the deal.
The price of the transaction, which will be put to Kering shareholders in April at the group`s annual meeting, has yet to be determined, he said.
The disposal was likely to be a boost for Kering shares, analysts said.
"The Puma divestiture materializing sooner - rather than later - will add oomph to the stock," Exane BNP Paribas analyst Luca Solca said in a note.
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