With the sale reported to be worth just £1, the divestment is expected to be completed by 30 June 2018.
The buyer gets all Homebase assets, including the Homebase brand, its store network, freehold property, property leases and inventory for "a nominal amount".
In addition, the 24 Bunnings pilot stores will "promptly"convert to the Homebase brand.
The deal includes a value share mechanism whereby Wesfarmers is entitled to 20% of any equity distributions from the business, without a time limit.
Wesfarmers Managing Director, Rob Scott, says of the exit: "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."
“A divestment under the agreed terms is in the best interests of Wesfarmers’ shareholders and will support the ongoing reset and repositioning of the Homebase business."
However, he adds: “While the review confirmed the business is capable of returning to profitability over time, further capital investment is necessary to support the turnaround.
"The materiality of the opportunity and risks associated with turnaround are not considered to justify the additional capital and management attention required from Bunnings and Wesfarmers."
Wesfarmers expects to record a related loss of £200-230 million (around AU$386-482m) in the Group’s 2018 full-year financial results.
Wesfarmers bought the Homebase business in early 2016 for AU$705 million amid cries of "arrogant Aussie" storming boots & all into the already struggling UK home improvement market.
As we reported back in 2016, the pundits had it that the UK market was looking at max 2% growth for the foreseeable future and that there simply was "Not enough market growth to go round"...
As if to back these skeptics up, in its first full financial year since acquisition, BUKI reported operating revenue of £1.3b (AU$2b) and a loss before interest and tax of £54m (AU$89m).
Seeing Kingfisher Group's ongoing woes in terms of its consumer facing B&Q banner, it will be interesting to see if the new owners of Wesfarmers' BUKI assets can turn the UK market around.
Hilco is said to specialise in troubled retailers, for example bringing HMV music stores back from the brink some five years ago.