Wesfarmers, the owners of Australian DIY chain Bunnings, has sold Homebase for a nominal fee of just £1, only two years after the firm acquired the business for £340m.
Homebase has been bought by restructuring specialist Hilco, who in 2013 also clinched a deal to save music and DVD retailer HMV.
This latest news means that Wesfarmers expects to make a loss of up to £230m as the group will offload the entire 250-store Homebase chain.
All 24 of the stores it has rebranded to Bunnings will become Homebase again.
At this stage, no store closures have been announced but thousands of jobs could be at risk.
Homebase currently employs 11,500 people in 250 stores across the UK.
In a statement, Rob Scott, the managing director of Wesfarmers, said: “The investment has been disappointing, with the problems arising from poor execution post-acquisition being compounded by a deterioration in the macro environment and retail sector in the UK.
“While it is important that we learn from this experience, this should not discourage our team from being bold and diligent in pursuing opportunities to create shareholder value.”