• Home Retail has agreed £340m deal to sell Homebase to Bunnings, a subsidiary of Wesfarmers
  • Wesfarmers buys all 265 Homebase stores
  • It plans to rebrand Homebase as Bunnings, its Australian fascia, over the next five years
  • Home Retail will return £200m to shareholders, after £75m transaction and restructing costs and £50m pension contributions are made
  • The transaction is subject to approval by Home Retail’s banks. Completion is expected this quarter

Home Retail has entered into an agreement to sell DIY retailer Homebase to Australian retail group Wesfarmers for £340m.

The sale includes all 265 Homebase stores and distribution centres. Wesfarmers will also license some Home Retail-owned product brands to sell in Homebase for one year.

The deal will return £200m to shareholders, after taking out £50m of pension contributions and £75m in transaction and restructuring costs. The sale, which is subject to approval by Home Retail’s banks, is expected to complete in the first quarter.

Wesfarmers plans to rebrand Homebase to its Australian DIY fascia Bunnings over the next three to five years.

Home Retail said the sale would allow it to focus on Argos’ transformation, which it said was the “greatest potential source of shareholder value”. Sainsbury’s is targeting an acquisition of Argos, following a thwarted attempt late last year.

Home Retail chairman John Coombe said: “We are very pleased to have reached agreement with Wesfarmers regarding the sale of Homebase. We believe that this is the best deal for shareholders and for the business.

“Wesfarmers is an experienced and successful retailer with exciting plans to invest in and grow their presence in the UK through Homebase. This transaction crystallises value for our shareholders from our ownership of Homebase and specifically the work that we have been doing through the Productivity Plan.”