Blacks Leisure has agreed a deal to transfer its UK O'Neill wholesale business to O'Neill Europe.
Under the arrangement, the UK wholesale operation will become a subsidiary of O'Neill Europe in May. Blacks Leisure will continue to operate O'Neill stores in UK.
Blacks Leisure announced its intention to end its UK wholesale arrangement with O'Neill in October to focus on its core retail operations, including Blacks and Millets.
Blacks Leisure chief executive Neil Gillis said: "The O'Neill wholesale business falls outside of the group's core retailing expertise. Transfer of the business back to the licence holder will free up management resource and further reduce the group's working capital requirement as it continues to execute its recovery plan."