Continuing its West-ward thrust, into Eastern and Central Europe, AS Watson will acquire a 65 per cent stake in a Ukrainian retailer.

The retail arm of the Asian port-to-telecom giant Hutchison Whampoa will hold the controlling share of DC, Ukraine's largest health and beauty product retailer.

But the deal is subject to approval by anti-monopoly authorities because Watsons is the world's largest retailer of health and beauty products.

The company hasn't revealed the financial details of the deal, but said it planned to double the number of DC outlets in the "near future".

Set up in 1997, DC now operates 99 stores and employs about 2,300 employees in Ukraine. Its acquisition will be another step by Watsons to expand into Eastern and Central Europe after setting shop in Russia, Lithuania, Latvia, Estonia and Slovenia, a company statement said.

Watsons, which operates more than 7,400 retail stores in 54 economies, has been exploring the European market after fortifying itself in Asia, especially in Hong Kong and on the mainland.

In May 2005, it agreed to buy British perfume seller Merchant Retail Group Plc for US$406 million. Before that, it acquired French perfume retailer Marionnaud for US$667 million, and in 2002, it paid US$1.63 billion for Dutch retail chain Kruidvat Group.

Ukraine is an emerging market for retail business, AS Watson managing director Ian Wade said yesterday. As the leading health and beauty products' chain in Ukraine, DC may be the right foundation AS Watson needs for a firm foothold in Central and Eastern Europe.

"We foresee a very healthy economic growth in Ukraine in the coming years, and through this acquisition we expect to capture a considerable share of the annual retail sale growth of health and beauty products in that country," Wade said.

(HK Edition 07/20/2006 page3)