Europe's biggest car maker Volkswagen is to sell its car rental unit, Europcar, to French investment company Eurazeo for 3.32bn euros (£2.27bn).
Volkswagen aims to restructure
The sale will include Europcar's debt as well as equity and comes after Volkswagen considered several options.
The decision to sell the unit pushed shares in Volkwagen higher before the price settled at 56.05 euros.
The deal, set to close by mid-year, needs approval by the supervisory board as well as competition regulators.
It is unclear how Eurazeo will finance the deal, which includes 1.26bn euros in equity and 2.06bn in debt.
Last September, VW, whose brands include Audi and Skoda, stated that it was considering different options for the car rental unit.
This latest decision is part of Volkswagen's wider effort to focus on manufacturing and to restucture the company between now and 2009 against a backdrop of falling earnings.
The strategy also involves plans to cut 20,000 jobs.
Volkswagen's move comes after US car company Ford sold its Hertz rental unit for $5.6bn last year to a group of private investors.