A handshake seals the deal for Kruidvat Group chief executive Dick van Hetel, Hutchison deputy chairman Victor Li, chairman Li Ka-shing, group managing director Canning Fok and AS Watson group managing director Ian Wade. (photo credit: Reuters)

Hong Kong conglomerate Hutchison Whampoa Ltd has extended its global reach with the acquisition of Dutch health and beauty retailer Kruidvat Group for 1.3 billion euros (HK$9.8 billion).

The buyout adds 1,900 outlets to the existing 930 personal care stores run by Hutchison's subsidiary, AS Watson. This makes it one of the world's largest health and beauty retail chains, with expected combined sales of more than 7 billion euros (HK$52.9 billion) this year.

Unveiling the deal, Hutchison chairman Li Ka-shing said that while Hong Kong will continue to be the principal operations base, the group expects to "focus more on opportunities in Europe, mainland China, and other Asian countries in the near-term".

The purchase of the Kruidvat Group is expected to significantly boost AS Watson's presence in Europe. According to Canning Fok, Hutchison's group managing director, the conglomerate chose to acquire the Kruidvat Group "for its exceptional reputation and market leader position". He added: "It is an excellent fit for our expanding retail business, giving us a more diversified portfolio and better geographical balance. The acquisition also provides us with many opportunities for synergies in Europe and Asia."

Kruidvat Holding operates one of the largest drugstore chains in Europe, and its 1,900 outlets employ 24,000 people in six European nations. The company's health and beauty retail chains include Superdrug in the UK, Kruidvat and Trekpleister in the Netherlands, Kruidvat in Belgium, and Rossmann in Poland, Hungary and the Czech Republic. It also runs the perfumery retail chain ICI Paris XL in the Netherlands and Belgium.

AS Watson's acquisition of Kruidvat is its latest strategic expansion in Europe's retail market, following the 2000 acquisition of the 280-store strong Savers health and beauty chain in the UK.

Kruidvat chief executive Dick van Hedel said AS Watson is a global player with a strong Far East presence, and would offer Kruidvat the ideal platform for sourcing supplies from these markets.

With the buyout, Hutchison now has investments in five core businesses in 41 countries. These core interests include ports and related services, telecommunications, property and hotels, retail and manufacturing, and energy and infrastructure. Hutchison recently announced a six-month net profit of HK$5.9 billion (US$758 million), against HK$7.2 billion (US$925 million) in the same period last year.

Meanwhile, AS Watson is also working on a partnership with the UK-based Boots Retail International. Under the tie-up, which began in January this year, Boots would extend its reach in Asia by offering a range of products through AS Watson stores. Already, 40 AS Watson stories in Taiwan - out of a total of 220 - offer Boots products.

The manufacture of an empire

Li Ka-shing

As a humble immigrant from southern China, Li Ka-shing set up Cheung Kong Industries in 1950 to manufacturer plastic products including flowers.

With his keen eye for spotting opportunities at the right time, Li soon entered the property business through his flagship company Cheung Kong (Holdings) Ltd, and went on to amass a fortune in real estate. In 1972, Cheung Kong listed on the Hong Kong stock exchange.

In a brilliantly strategic move Li took over Hutchison Whampoa, a respected Hong Kong-based British conglomerate, in 1979. This was followed by the acquisition of Hongkong Electric Holdings Ltd in 1985. Two decades after he emerged as a major league player, Li's Cheung Kong Group of companies now has a combined market capitalisation of about HK$474 billion (US$61 billion).

His interests cover such diverse areas as real estate, hotels, telecommunications, e-commerce, finance and investment, retail and manufacturing, ports and related services, energy, infrastructure, media, and biotechnology.

Li's interests have also spread across the globe. Today, Cheung Kong Group ranks among the top 100 corporations in the world, with businesses in 41 countries and over 163,000 employees. Hutchison Whampoa has also emerged as the world's largest private port operator with major operations in the UK, the Bahamas, Panama, Indonesia, Hong Kong and the Chinese mainland.