High street chemist Boots is to spin off its Halfords garage business, it announced on Wednesday.

Boots sold off its Halfords car repair outlets to the AA in July last year, and is considering selling off the rest of the car parts and bicycle group as it looks to concentrate on its core health and beauty business.

But it said the most likely method of disposing of Halfords would be to demerge the company to shareholders - floating it as a separate, independent business.

Under the proposed deal, Boots' shareholders would receive shares in Halfords which would then be listed as a company on the London Stock Exchange.

Confident forecast

"Our focus is on growing our health and beauty business," said Boots chief executive Steve Russell.

"Halfords is an excellent company with a strong management team and a good record of profit growth."

"I am confident it will thrive as an independent company."

Nottingham-based Boots, which has owned Halfords for more than 10 years, has recently invested heavily in modernising the stores.

Plans drawn up

Halfords has 400 stores, including 330 out-of-town superstores, 58 high street shops and 12 motorway outlets.

It is believed to have made a profit of about �37m in the last year, and could be worth �400m.

Rob Scrivens, Halfords' managing director, will become chief executive of the new company.

A spokesman for Boots said it was drawing up plans for the demerger and would present them to shareholders shortly.

Shares in the group fell 2.5p to 692p in morning trading.