Woolworths has confirmed it will close all the stores of its failed home-improvement chain Masters in December, with jobs to go.

It is another major step in Woolworths' humiliating retreat from the $45 billion home improvement market with it also revealing the sale of its Home Timber and Hardware business to smaller rival Metcash.

A consortium made up of an aged care provider Aurrum, the Spotlight Group and Chemist Warehouse, have agreed to buy the 82 Masters sites, if Woolworths' US-based joint venture partner Lowe's agrees.

Inventory from the Masters' stores will be sold down by inventory divestment specialist Great American Group over the next couple or months.

All up the hardware firesale is expected to net just $500 million for Woolworths, well short of the billions of dollars the company has spent on the Masters folly.

With the property sales included, Woolworths is expecting to recover about $1.5 billion from the failed venture.

"When I was appointed in February, I said exiting the home improvement business was a top priority. Today's announcement delivers on that commitment," chief executive Brad Banducci said.

He said the sale process will deliver some certainty for the 7,700 staff employed in the home improvement area, however many will lose their jobs with some to be deployed elsewhere in the Woolworths group.

SDA National Secretary Gerard Dwyer said the union had commenced discussions with Masters and Woolworths and would work closely with the company to secure employment where possible.

"This is a devastating announcement for some 6,000 staff in light of recent improved trading and positive signals that some parties were interested in the business as a

going concern," Mr Dwyer said.

"We'll be working hard to ensure that Masters staff members are offered alternative employment to ease the impact this will have on them and their families."

Metcash to buy Home Timber and Hardware

Metcash will pay Woolworths $165 million in cash for 100 per cent of the Home business that Woolworths bought in 2009 for $88 million.

Home was the first plank in Woolworths' attempt to take on Wesfarmers' "big box" hardware champion Bunnings, before scaling up its ambitions with the Masters brand in 2011.

The strategy has failed spectacularly with Woolworths expected to write off Masters as a discontinued business at a cost of $2.7 billion in its full-year results.

Woolworths — along with US joint venture partner and 30 per cent stakeholder Lowes — is still looking for a buyer for Masters.

In a statement to the ASX, Metcash said the deal will be funded through a combination of $80 million in equity to be raised from institutional investors and $85 million in debt.

It was purchased at the fairly cheap multiple of seven-times earnings with deal adding scale to Metcash's existing Mitre 10 hardware business.

Metcash said Home will make money from the start, forecasting it increase earnings per share by 4 per cent in the first full financial year.

The deal is expected to be completed in early October and will give Metcash a network of around 1,800 hardware stores generating $2 billion in sales.

Metcash promises better deal for hardware customers

The Australian Competition and Consumer Commission gave a green light for the prospective deal in July, clearing the way for the sale to go ahead.

Mitre 10 and Home have a strong focus on trade customers as opposed to the do-it-yourself market Masters chased.

Metcash chief executive Ian Morrice said both Mitre 10 and Home are passionate about supporting independent retailers.

"The increased scale, together with the opportunity to realise significant efficiencies, will enable us to be more competitive and deliver a better outcome for both our hardware retailers and their customers," Mr Morrice said.

Woolworths made little comment apart from advising the ASX of a trading halt.

"Woolworths is looking to exit the home improvement sector and we are unable to comment on the sale process that is currently in train," the company said in a statement.

Metcash said it would remain in a trading halt until Friday morning pending the completing of the equity raising.