Britain's Home Retail Group, which recently rejected a takeover approach from supermarket group Sainsbury's, announced Monday the sale of home improvements and gardening unit Homebase to Australia's Wesfarmers.

HRG, which also owns catalogue chain Argos, said in a statement that it has agreed to sell Homebase to conglomerate Wesfarmers for £340 million ($485 million, 444 million euros) in cash.

The London-listed group plans to return approximately £200 million to shareholders from the proceeds.

HRG had already confirmed last week, in response to press speculation, that it was in advanced talks with Wesfarmers over the Homebase sale.

Perth-based Wesfarmers added in a separate statement on Monday that it would re-brand Homebase under its Bunnings Warehouse banner over the next three to five years.

Homebase has more than 270 stores, employs around 18,000 staff and turned over about £1.5 billion last year.
The transaction is expected to complete by the end of the first quarter of this year.

Earlier this month, Sainsbury's had revealed that HRG had rejected its takeover approach made in November.

Sainsbury's -- which wants Argos for its distribution capability as it seeks to build a store-based and online business -- did not give the level of its offer but media have put the price at about £1.1 billion.

The supermarket giant now has until February 2 to decide whether to make a formal bid, under British takeover rules.