AS Watson,the retail and manufacturing division of Hutchison Whampoa Limited, announced today a recommended cash offer of 221.9 million (the "Offer") for the entire issued and to be issued ordinary share capital of Merchant Retail Group PLC, a UK listed specialist perfume retailer.
Merchant Retail's principal business, The Perfume Shop, has developed a highly successful format in the UK fragrances sector. The business has grown consistently over the past five years, from 55 stores to 114 stores in the UK and Ireland, generating turnover that has increased from 37.8 million to 105.8 million over the period. The preliminary results for the 52-week period ended 26 March 2005, announced today, show another strong performance.
AS Watson is the largest health and beauty retailer in the world by number of stores. Since 2000, Europe has been a major focus of expansion for AS Watson, where it has actively built a strong European presence in the health and beauty market through a series of acquisition. Merchant Retail represents a strategic opportunity for the growth and development of AS Watson's perfumery and cosmetics business. The addition of Merchant Retail to AS Watson's European network will complement the recently acquired Marionnaud chain which currently has no presence in the UK
Commenting on the offer, Ian Wade, Group Managing Director of AS Watson, said:
"I am particularly proud to announce this Offer as I believe in the strong potential of Merchant Retail. The addition of Merchant Retail to our portfolio further expands our European footprint and strengthens our position as the largest retailer in the perfumery and cosmetics sector of the health and beauty market with more than 1,500 stores. We look forward to bringing our resources and international experience to grow Merchant Retail's business in the UK."
Brian O'Callaghan, Chairman of Merchant Retail Group plc, said:
"Merchant Retail is a natural choice for AS Watson to establish a strong presence in fragrances in the UK, to complement its recent acquisition of Marionnaud in France. Merchant Retail has performed well in recent years. However, with the likelihood of an increasingly competitive market in the UK and a challenging retail spending environment, developing the group further is most likely to succeed if undertaken by a larger international corporation. The Directors of Merchant Retail consider the terms of the Offer to be fair and reasonable and accordingly have unanimously recommended that Merchant Retail Shareholders accept the Offer"
