Wesfarmers already owns Bunnings - one of Australia's largest suppliers of outdoor living and DIY products.
The Australian retailer said it would spend a further £242m to build up the Homebase business under the Bunnings brand.
The deal is subject to shareholder approval.
Wesfarmers,
which owns one of Australia's biggest supermarket chains, Coles, said
the UK's home improvement and garden market was worth £38bn.
Homebase is the second-largest home improvement and garden products retailer in the UK and Ireland.
