LONDON—Teneo has been appointed to advise Australian retail giant Wesfarmers on its proposed £340m acquisition of UK DIY chain Homebase.

Wesfarmers intends to build Homebase under its existing Bunnings brand.

The company, which also owns one of Australia's biggest supermarket chains, Coles, said the UK's home improvement and garden market was worth £38bn. Homebase ranks second among retailers in that that market.

Homebase parent Home Retail Group is itself a bid target for UK supermarket chain Sainsbury's, which is interested in Home Retail Group's other major business, Argos.

Teneo's UK consulting business includes three agency acquisitions that it made last year — Blue Rubicon, StockWell and Pendomer — with the latter two now rebranded under the Teneo banner.