June 6, 2018 / 11:51 PM / a year ago

Australia's Wesfarmers wary of dealmaking after Homebase fiasco

SYDNEY, June 7 (Reuters) - Australian retail conglomerate Wesfarmers Ltd is wary of dealmaking and focused on existing businesses rather than acquisitions, its managing director said on Thursday, after a disastrous foray into British hardware.

“When it comes to larger-scale M&A, particularly where a control premium is associated, it is more challenging to realise superior returns. I am therefore especially cautious when evaluating such opportunities,” Managing Director Rob Scott told investors at a strategy day in Sydney.

“The most compelling opportunities that I see to generate superior returns from capital allocation reside in our existing businesses.”

The company would need to see a “very compelling” opportunity before making a significant investment, he added.

Wesfarmers last month sold its British home improvement chain Homebase for a nominal 1 pound just two years after buying it, ending an embarrassing offshore adventure that cost it $1 billion. ($1 = 0.7453 pounds) (Reporting by Tom Westbrook; Editing by Stephen Coates)

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