Wesfarmers offloads Homebase to restructuring specialist Hilco for £1

Wesfarmers paid £340m for Homebase just two years ago but wrote off roughly £530m earlier this year as a result of the acquisition.

Hilco, which rescued music chain HMV in 2013, will revert the 24 Homebase stores trading under the Bunnings name across the UK to their original trading name following the disposal, expected to cost up to £230m.

The Perth-based firm admitted making several "self-induced" blunders, ranging from underestimating winter demand for items such as heaters and storage products to its decision to discontinue Homebase's popular kitchen and bathroom ranges.

Rob Scott, Wesfarmers' chief executive, said the group had found the UK market to be "very competitive".

Homebase chief Damian McGloughlin said the agreement with Hilco marked an "exciting new chapter" for the retailer.

Wesfarmers will be entitled to 20% of any future sale of Homebase as part of the cut-price deal.

As of 0950 BST, Wesfarmers shares had ticked up 0.91% to AUD 45.52 each.