Boots, the health and beauty chain, is selling its loss-making Halfords garages to Centrica, the owner of the Automobile Association (AA).
The £5.75m cash deal for the United Kingdom's largest full-service garage chain – which made a pre-tax loss of £3m for the year to 31 March – does not include the more lucrative retail side of the Halfords business.
All 410 retail stores will remain part of Boots. The company said they were not for sale.
David Thompson, the deputy chief executive of Boots, said that the sale was a "good deal for customers, staff and shareholders". Mr Thompson added: "Halfords will now be able to concentrate fully on its retail business and the further roll-out of its successful new superstore format."
For the AA, the purchase of the 129 Halfords garage service centres marks the first major acquisition since the UK's largest motoring organisation was bought by Centrica in September of 1999.
David Wallace, the director of AA service centres, said the plan was to turn the business around within three years. "We are confident that we will turn it into profit with a dedicated focus as a garage business, as opposed to part of a retail operation," he said.
A spokesman for Centrica said the move was part of the company's strategy to be a "provider of energy and essential services at home and on the road".
Halford's 1,200 garage staff will transfer to the AA. Roger Wood, Centrica's executive director who has responsibility for AA road services, said the company was looking forward to welcoming them into the "AA family".
Boots is due to release a trading update for Halfords at today's AGM. For the year ended 31 March, the division's sales were £509m, up 3.2 per cent, and pre-tax profits were £37m, down 18 per cent, following the investment of £47m in refurbishing stores.