MASTERS stores will close the doors by mid-December, after owner Woolworths decided to pull the plug on its home improvement experiment in a $1.5b three-part deal.

Some of the large warehouse stores to be converted into shopping centres by their new owners.

In a deal announced today, Woolworths said in a statement that it had agreed on three contracts to “facilitate its exit from home improvement” with a $1.5 billion three-way deal.

The Masters sale of 82 sites to the Home Consortium will see the business go to consortium partners the Arrum Group, Spotlight Group and Chemist Warehouse.

Woolworths expects to make a net proceeds of $500 million from the arrangement.

The announcements included the decision to cease trading by 11 December, but will honour workers’ entitlements and customers’ rights.

“Woolworths will work hard to find Masters employees jobs within the group, or will pay full redundancy where suitable roles are not available,” the company said in a statement.

It said all customer gift cards, product warranties, returns, lay-bys and contracted home improvement projects will be honoured.

The company is also expected to start selling down its existing inventory “over coming months” it said.

Home Consortium agreed to buy the 61 Masters stores and 21 development sites to transform them into large-format retail centres.

It will transform the Masters sites into centres with a selection of retailers, including Spotlight, Anaconda, Chemist Warehouse, JB Hi-Fi, The Good Guys, Super Amart, Bunnings Warehouse and Woolworths supermarkets.

Woolworths also sold its Home Timber & Hardware chain to Metcash - owner of the Mitre 10 chain - for $165 million as the supermarket giant finalises its exit from the hardware business.

About $1.5 billion in gross proceeds is expected from the collective sales and after wind-down costs are factored in, Woolworths expects about $500 million in net proceeds.

Inventory specialist GA Australia will manage the sale of Masters’ stock, expected to fetch $500 million.

Woolworths chief executive Brad Banducci, who was parachuted into the top position in February said these agreements follow an intense seven months of reviewing all possible options.

“This decision means management can focus on driving the momentum in our core businesess,” he said in a statement.

He said the sale to Home Consortium was subject to the approval of its hardware joint venture partner Lowe’s.

The supermarket giant has been looking to offload its hardware businesses since January following years of losses.

The deal comes on the back of selling Woolworths’ Home Timber & Hardware business to Metcash for $165 million.

Metcash, which owns Mitre 10 and supplies IGA supermarkets, expected to finalise its deal by October.

The group said the purchase of the hardware wholesaler and retailer would give it a combined network of about 1800 hardware stores generating about $2 billion in sales every year.

“This 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,” Metcash chief Ian Morrice said.

“Our objective is to continue to build successful independent retailers and grow a vibrant independent hardware sector, for the long term.”

Metcash announced it would fund its Home Timber deal by selling $80 million worth of new shares to institutional investors and borrowing another $85 million from its lenders.

The Australian Competition and Consumer Commission had raised concerns about Metcash taking control of Home Timber — Mitre 10’s only rival as a full-service wholesale option for independent hardware and home improvement retailers.

But the competition watchdog cleared the bid in July after Metcash promised to let independent stores buy products from other sources.

Woolworths in February said it was aiming to sell or wind up its Masters hardware stores and Home Timber business.

That announcement came as it declared a $972.7 million first-half loss — its first in more than 20 years — due to $1.9 billion of writedowns related to its attempt to challenge Wesfarmers-owned Bunnings.

Shares in Woolworths and Metcash were both in a trading halt today.

with AAP