LONDON, Jan 13 (Reuters) - Britain's Home Retail HOME.L is in talks to sell its DIY chain Homebase to Australia's Wesfarmers WES.AX , Sky News reported, a deal which could make it easier for Sainsbury's SBRY.L to achieve its ambitions of buying the group's Argos chain.
The Australian company, which owns Coles supermarkets, is close to agreeing to pay about 350 million pounds ($506 million) for Homebase, Sky News said on Wednesday.
Sainsbury's said earlier this month it had made an approach to buy the whole of Home Retail in November, but its interest lies mainly in its bigger Argos general merchandise business, according to the rationale it published earlier on Wednesday.
Home Retail, which rebuffed Sainsbury's initial approach, updates the market on trading on Thursday. No one was immediately available to comment from Home Retail.
($1 = 0.6914 pounds)