Home Retail Group has accepted an offer from Australian group Wesfarmers to buy the Homebase chain for £340 million.

In a statement, John Coombe, chairman of Home Retail Group, 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. 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."

The group intends to return net cash proceeds of approximately £200m to shareholders, after taking account of payments totalling £50 million to the Home Retail Group Pension Scheme and transaction, separation and restructuring costs of approximately £75 million.