The owner of Homebase is in talks about selling the DIY retailer to one of Britain’s biggest general merchandise chains, as it prepares to launch a wider auction of the business it rescued six years ago.

Sky News has learnt that Hilco Capital, which took control of an ailing Homebase in 2018, has had an approach from The Range, which has quietly become one of the country’s biggest retail successes, about a deal.

City sources said the discussions were not certain to lead to an agreement but analysts suggested that if they did, The Range was likely to want the bulk of Homebase’s roughly-140 stores.

A formal sale process encompassing other potential bidders is expected to get underway in the coming days, according to one insider.

Hilco acquired Homebase following a disastrous spell under the ownership of Wesfarmers, an Australian group, during which it lost hundreds of millions of pounds.

Other retailers touted in the past as potential bidders for Homebase include B&M European Value Retail, the London-listed discount retailer.

The DIY chain has had a nomadic existence, being owned at various points by J Sainsbury and then coming under common ownership with Argos as part of Home Retail Group.

Wesfarmers’ foray into the UK proved an unmitigated failure, leading to Hilco – which has owned retail brands such as HMV and Cath Kidston – taking control.

In 2018, Homebase went through a company voluntary arrangement which closed a substantial number of stores, renegotiated rent deals and about 1500 job losses.

The turnaround investor succeeded in stabilising it, but saw its fortunes impacted by the pandemic and subsequent cost-of-living crisis.

An initial surge in sales when COVID-19 hit as consumers focused on home improvement gave way to choppier market conditions.

However, Homebase lost more than £40m in 2022, according to accounts filed at Companies House, although last year’s performance is understood to have been significantly better.

As well as its operations in the UK, Homebase has a presence in Ireland, with the two divisions potentially being sold separately.

Based in Devon, The Range is part of CDS Superstores, which is controlled by the businessman Chris Dawson.

Last year, it paid £7m to buy the brand and intellectual property assets of Wilko, which had collapsed into administration.

Since then, Mr Dawson has opened a string of new Wilko outlets.

The Range trades from more than 200 outlets across Britain selling homewares, furniture and DIY products.

Mr Dawson opened its first store in Plymouth in 1989.

Nicknamed ‘the Del Boy billionaire’ because of the distinctive number-plate on his Rolls-Royce Wraith, he has become one of Britain’s most successful retail entrepreneurs.

Hilco and Homebase have been contacted for comment and The Range could not be reached for comment.