Woolworths on Monday declared its plans to upgrade its hardware chain by acquiring Gunns Limited's five store in Tasmania for $40 million.

Woolworth's will also include buying the Becks Timber & Hardware business.

A spokesperson for Gunns said on Monday it has reached an agreement to sell its hardware retail businesses to Blue Mountains hardware Pty Limited, which is owned by subsidiary John Danks & Son Limited.

Danks was purchased by Carboxy Ptd in November 2009, a joint venture between Woolworth's and US hardware company Lowe's Companies Inc., which is one of the world's home improvement retailer.

Gunns' chief executive Greg L'Estrange said the agreement for Woolworth's purchase came after a competitive bid process, with offers involved from other parties.

Employees of all retail stores will be retained under Woolworths.

On the other hand, Danks revealed that the acquisition include one timber joinery centre, one truss manufacturing plant and a support office.

"As part of the acquisition, Danks will make offers to retain all employees of the Gunns business, including support staff and management," the company said.

Graeme Danks, the company's general manager, said the acquisition will provide consumers more hardware supplies and options and help maintain the employment of 283 people.

Danks also said it will buy Becks Timber & Hardware business.

"All Becks employees will receive offers of employment," Danks said.

Dank's independent retailers consists of Home Timber & Hardware, Thrifty-Link Hardware, and Plants Plus stores.