Boots PLC has entered into exclusive negotiations with CVC Capital Partners on its proposed bid for Halfords, the Sunday Telegraph reported without citing sources.
CVC has beaten rival offers from Apax Partners and a number of trade buyers.
A deal could be finalised within four weeks, it said.
However, insiders at Boots insisted that the group would develop plans to demerge the unit in parallel with detailed discussions with CVC.
"We won't be (forced) into accepting a lower price at the last minute. If CVC doesn't put enough money on the table, then we will push ahead with the demerger," the newspaper quoted a source as saying.