Embattled pubs firm Punch Taverns on it would demerge its managed pubs division, Spirit, as part of a strategy to reduce its £3bn debt pile.
The company, which is the biggest pubs group with 6,770 establishments, said it would demerge its better-performing Spirit business from its struggling tenanted business to create two independent public companies.
Punch will then look to reduce the size of its tenanted business by nearly half to around 3,000 pubs from 5,967 currently through disposals and closures.
Tenanted pubs are run by publicans who pay the company rent and rely on it for their beer supplies. Managed pubs, which have fared better during the recession, are run directly by the company and generally have greater freedom on pricing.
Punch built up its debt by making a series of highly leveraged acquisitions during the credit boom including the 2.7 billion pound acquisition of rival Spirit Group in 2005.
It has been reducing its debt by selling off underperforming pubs and buying back debt but said on Tuesday that its current strategy is not sustainable with structural change being needed to drive value.
The demerger is expected to be completed by the end of the summer.
"A demerger will provide the platform to enable both businesses to focus on the very different strategies required to deliver shareholder value and will provide choice and liquidity for investors," said Chief Executive Ian Dyson.
Britain's pubs have had a torrid time in recent years battling a recession, smoking ban and cut price alcohol in supermarkets – all of which have combined to keep drinkers at home resulting in record closures across the industry.