Homebase is set to be taken over by Australian retail giant Wesfarmers in a deal worth £340 million.

The acquisition is still subject to approval by Home Retail Group - Homebase's parent company - shareholders, and is expected to be completed within the first three months of the year.

Wesfarmers owns Coles, one of Australia's biggest supermarket chains, and Bunnings, a garden and DIY retailer. The company said the UK's DIY and outdoor living industry is worth £38 billion. It also said it would spend an extra £242m on building up the Homebase business under the Bunnings brand.

Bunnings managing director John Gillam described the move as a "compelling opportunity to enter the attractive UK home improvement and garden market".

He said: "Homebase has an established and scalable store platform with strong representation in high density area.

"The stores are well-sized for the UK market and support warehouse merchandising."

He added: "We will combine essential local elements with the best of Bunnings to bring customers in the UK and Ireland an exciting new home improvement and garden offer."

Home Retail Group 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."