Kirkcaldie & Stains is to become a David Jones store, subject to shareholder approval.
It would be the end of the iconic Wellington department store, which had been facing falling retail sales in recent times.
The Australian-branded store would provide employment opportunities to current staff. It would re-open under the new name by mid-2016.
Kirkcaldie & Stains had previously announced that it had been undertaking a strategic review of its retail operations. It was also considering options for a return of funds to shareholders, following last year's sale of the Harbour City Centre for nearly $46 million.
The company's retail business made a pre-tax profit of $145,000 in the six months ended in February, which was down 37 percent on the year earlier.
The chairman, Falcon Clouston, has said the company's February retail sales disappointed, with revenues slightly behind the year earlier.
The company's shares, which were placed in a trading halt before the announcement, jumped almost 28 percent following the news.
Shortly before 4.30pm, the share price was up 47 cents to $2.15.