This agreement should simplify a separate takeover approach from Sainsbury’s to buy Home Retail Group.
Homebase owner Home Retail Group has confirmed it has reached a sale agreement with Australian retail giant Wesfarmers.
Sky News city editor Mark KleinmanÂ revealed last week that Wesfarmers were in advanced talks to buy Homebase.
This prompted Home Retail Group to issue a special release outlining its intention to dispose of Homebase.
The deal which is worthÂ Â£340mÂ will see Â£200m returned to shareholders once transaction, restructuring and pension costs have been taken into account.
Wesfarmers can easily afford the price tag: with a market valuation equivalent to more than Â£21bn, it is one of Australia’s biggest listed companies and has operations spanning supermarkets under the Coles brand, department stores, coal production and property.
Homebase will be rebranded Bunnings over the next few years to align it with the name of the Australian DIY chain owned by Wesfarmers.
The deal does note includeÂ Home Retailâ€™s product brands, which include Habitat, Schreiber and Hygena, all of which are also sold in Argos, but the terms do allow Homebase to continue to sell these brands on licence for a year.
Home Retail Group, which also owns Argos, began talks with Wesfarmers in September.
John Coombe, Chairman of Home Retail Group, said, “We believe that this is the best deal for shareholders and for the business.”
Mr CoombeÂ went on to comment on Argos which is sure to stoke further speculation that a second offer from Sainsbury’s is likely to be tabled in the next two weeks.
“Following completion of this Transaction, the Board will remain focused on the continuing transformation of our Argos business and the options for delivering shareholder value, supported by a strong overall financial position.”
Homebase is on track to close another four stores in the next eight weeks, having already closed 31 over the course of their current financial year.
Over the next year and a half WesfarmersÂ is likely to require the removalÂ of Argos’ digital concessions from Homebase stores.
Shares in Home Retail Group have lost almost a quarter of their value in the last 12 months but have recently responded positively to both this deal and Sainsbury’sÂ interest in Argos.
Shares were nearly 4% higher in early trading.