By Serena Ng And Chelsey Dulaney 

Procter & Gamble Co. is parting ways with much of its beleaguered beauty business, as the maker of Tide, Pampers and Gillette refocuses around its best-selling products.

The consumer products giant said Thursday that it would combine 43 of its beauty brands with Coty Inc. in a $13 billion deal complicated by the need to avoid a big tax bill on an outright sale.

The deal's final price and form haven't been settled, but it will probably involve splitting off brands including Wella shampoo, Clairol hair dyes, Covergirl makeup and Hugo Boss perfume into a separate company that will merge with Coty, a New York-based beauty company that already owns a number of cosmetics and perfume brands.

The exit represents the single-largest divestiture of assets in P&G's history and comes after the earlier sale of the Duracell battery brand to Warren Buffett's Berkshire Hathaway Inc. as well as a number of smaller sales around the world.

It is also a reversal for Chief Executive A.G. Lafley, who built up the company's beauty business aggressively during his first turn at the helm before returning two years ago with a mandate to boost the company's sluggish growth. His strategy has been to cut dozens of brands to focus resource on the sprawling company's best products and markets.

Last summer, the CEO said the company would exit as many as 100 brands to focus on what P&G now says will be a portfolio of 65 market-leading brands that generate almost all of the company's revenue and profit.

P&G Chief Financial Officer Jon Moeller said on a call with investors Thursday the deal essentially completes the reshaping of the company's portfolio. He said P&G isn't entirely exiting beauty and will focus on growing its remaining hair, skin and personal care brands, which include Pantene shampoo, Olay facial moisturizers and SK-II cosmetics.

P&G said it is aiming to return up to $70 billion to shareholders via dividends and share buybacks in the next four years as it completes the divestments of the beauty brands and Duracell.

The beauty brands P&G is parting with have annual sales of $5.9 billion--larger than Coty, which reported $4.6 billion in sales in its last fiscal year, which ended June 2013.

The deal may not be completed until the second half of next year, P&G said. The company hopes to use a structure known as a Reverse Morris Trust that will avoid triggering a large tax bill for the company and its shareholders. That structure would allow P&G shareholders to exchange their shares for Coty shares or for shares in a new merged entity that will own the beauty brands of both firms.

P&G is an active user of the structure, using it to dispose of brands including Crisco shortening, Pringles chips and Folgers coffee in recent years.

P&G has spent months looking for a buyer for chunks of its beauty business, which has lagged behind its other divisions selling more mundane household goods like dish soap and disposable diapers. The deal announced Thursday takes the number of brands for which P&G has mapped out exits to more than 80.

The culling is aimed at accelerating P&G's revenue growth, something it has struggled with for years. The sprawling beauty business in particular has been a laggard despite profit margins that can run higher than those for household products like toilet paper and dish soap. Its sales recently have been the worst of P&G's five main business lines.

In the first three months of 2015, sales from P&G's beauty, hair and personal care products declined 11% and were the only division to post a drop excluding currency effects.

Following the deal, P&G shareholders would own 52% of the shares outstanding, while Coty's existing shareholders would own 48% of the combined company.

P&G's shares gained 1% in premarket trading, while Coty added 2.8%.

P&G expects to book a one-time gain of $5 billion to $7 billion on the sale.

Write to Serena Ng at serena.ng@wsj.com and Chelsey Dulaney at Chelsey.Dulaney@wsj.com

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