John Coombe, chairman of Home Retail, 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 said that the acquisition of the 265-store Homebase chain would augment its own hardware business Bunnings, which operates in Australia and New Zealand.
Richard Goyder, Wesfarmers managing director, said: "Bunnings is well placed to unlock value from the Homebase business and has a proven track record in delivering growth both organically and through acquisition."
Homebase will be rebranded as Bunnings over the next few years.
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.