The company said on Friday it would sell the British hardware business, consisting of about 240 Homebase stores and 24 pilot Bunnings outlets, to the restructuring firm Hilco Capital. It will book a loss of between £200 million to £230 million ($350 million to $400 million) in its full-year results from the exit. Wesfarmers had hoped to replicate the success of its earnings powerhouse hardware chain in the UK and Ireland, but instead ran up heavy losses after misreading the market and alienating Homebase's existing customers The company paid $705 million for Homebase in 2016, but wrote down the value of the venture by $1 billion in February. All Bunnings stores will be converted back to the Homebase stores under Hilco's ownership.

'In the best interest of shareholders' Mr Scott said a review of Bunnings UK and Ireland (BUKI) concluded that Homebase was capable of returning to profitability over time but that a turnaround would require a significant cash injection in the short-term to achieve this - understood to be several hundred million dollars. The risks did not match the potential rewards, and getting out of the business now was the best option for shareholders, Mr Scott said. Wesfarmers won’t be recouping any of its losses from the sale, with Hilco buying the business for the nominal figure of £1 ($1.60). Getting out bruised, and hopeful

But Hilco will take over property leases with liabilities of about $1.8 billion which Wesfarmers could have had to wear if it decided to simply close the business down. As a faint silver line on the horizon, Wesfarmers will receive 20 per cent of the proceeds if Hilco is able to revive Homebase's performance and sell it on to a third party at any point in the future. Loading Mr Scott said he expected the failed experiment would have "significant remuneration implications" for current management, but stopped short of saying whether the board would also have their pay cut. “We fully understand that the buck stops with us, and there needs to be that accountability," he said.

The decision to branch offshore was made under former managing director and now AFL commission chairman Richard Goyder and former Bunnings boss John Gilliam, who have both since left the company. Mr Scott said the Bunnings team that hatched the expansion plan would be "as disappointed as anyone that things haven't worked out". Argo Investments managing director Jason Beddow, whose fund is Wesfarmers' 11th biggest shareholder with about $240 million worth of stock, said he was happy with the outcome as it avoided potentially billions more in losses. “If they've got out of it for less than it was going to cost to turn it around, it’s probably not a bad option," Mr Beddow said. “From Rob Scott’s perspective it’s someone else's problem. If he kept it and it didn’t work, that was his problem."

As well as casting off BUKI, Wesfarmers is in the process of spinning out its largest business, Coles, into a separately listed company and is on the hunt for new businesses to buy that will drive higher shareholder returns. Loading Mr Scott said he hoped the "decisive and diligent" action announced Friday would give investors confidence that his the team could make the right decisions on what to do with shareholders' money. “While it’s been a disappointing saga, I’m pleased with the outcome we’ve arrived at," he said. "What is most important is that we learn from the experience, but we should actually gain some confidence from the traction that we’ve been able to achieve.”

Citi analyst Bryan Raymond said he did not expect Wesfarmers would find a buyer that would take on the full Homebase lease book. The exit cost announced of up to $400 million was well below market exceptions of about $1 billion. "While the Homebase acquisition was a poor one, the costs of exit are much better than expected, removing a risk hanging over the stock and improving the balance sheet position," Mr Raymond said. Wesfarmers shares jumped just under 1 per cent to $45.52 - their highest value since November 2015. The stock has been on a rollercoaster ride in recent months, diving on news of the $1 billion BUKI writedown and soaring on news of the Coles spin-off.