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 5.3 billion euros ($6.4 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.
Under Chief Executive Bjorn Gulden, appointed in 2013, Puma has refocused on its core sports business after sales were hurt by a shift into fashion products, ousting Nike as sponsor of English soccer club Arsenal.
A distant third in the global sportswear market behind Nike and Adidas, Puma has focused on the world's most popular sports, such as soccer, running and motorsport, and launched a new drive to tap into booming sales of women's sportswear by appointing singer Rihanna as creative director in 2014.
Puma said it welcomed the transaction because it increases the company's free float - or freely tradable shares. It added the move would not affect its current strategy.
Puma will likely now be a candidate for inclusion in Germany's mid-cap index, Duplaix said.
The sports goods company is due to report full-year results on Feb. 12, having increased its profit guidance three times last year on the popularity of the collections designed by Rihanna, and shoes worn by Jamaican sprinter Usain Bolt.
Like German rival Adidas, Puma has enjoyed a revival in the United States as shoppers snap up its retro styles instead of basketball shoes, hurting Nike and Under Armour.
Puma's shares have risen by 45 percent over the past year, bringing its market capitalization to 5.3 billion euros, back at the level at which Kering bought.
Kering emerged as one of the big winners in a luxury goods revival last year as Chinese demand picked up, with a stellar turn at brand-of-the-moment Gucci helping earnings, and other labels such as Yves Saint Laurent and Balenciaga doing well.