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Thursday 14 July, 2005

A.S. Watson

Offer Unconditional

A.S. Watson
14 July 2005

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR
FROM AUSTRALIA, CANADA OR JAPAN

Embargoed until 7.00 a.m. (London time) on 14 July 2005

                                                                    14 July 2005

                               A.S. Watson Group

                           Recommended Cash Offer of
                197 pence in cash for each Merchant Retail Share

                                       by
                              UBS Investment Bank

                                  on behalf of
                           A.S. Watson (P&C UK) Ltd.

                          a wholly-owned subsidiary of
                           Hutchison Whampoa Limited

                   and (in the United States) by the Offeror

                                      for
                           Merchant Retail Group plc

                 Offer declared unconditional in all respects

1.            Unconditional in all respects

The Offeror, having received acceptances in respect of Merchant Retail Shares
representing more than 50 per cent. of the existing issued ordinary share
capital of Merchant Retail, has waived the 90 per cent. acceptance threshold and
is treating the acceptance condition as satisfied. As such, and further to the
announcement of 5 July 2005 that clearance has been obtained from the OFT in
relation to the Offer, all the conditions of the Offer have now been satisfied
and / or waived.  Accordingly, the Offer has been declared unconditional in all
respects and will remain open for acceptance until further notice.

2.            Detailed level of acceptances and ownership

As at 3 pm on 13 July 2005, valid acceptances of the Offer have been received in
respect of 97,542,863 Merchant Retail Shares, representing approximately 88.2
per cent. of the existing issued ordinary share capital of Merchant Retail.

Prior to the announcement of the Offer on 24 May 2005, the Offeror had received
irrevocable undertakings to accept the Offer in respect of a total of 16,493,838
Merchant Retail Shares, representing approximately 14.9 per cent. of the
existing issued ordinary share capital of Merchant Retail. Valid acceptances of
the Offer have been received in respect of 16,126,467 of these Merchant Retail
Shares, representing approximately 14.6 per cent. of the existing issued
ordinary share capital of Merchant Retail, and are included in the total number
of valid acceptances received above.

Prior to the announcement of the Offer on 24 May 2005, the Offeror also received
a non-binding letter of intent to accept the Offer from Legal and General. This
letter of intent was given in respect of a total of 5,906,166 Merchant Retail
Shares, representing approximately 5.3 per cent. of the existing issued ordinary
share capital of Merchant Retail. Valid acceptances of the Offer have been
received in respect of 5,837,313 of these Merchant Retail Shares, representing
approximately 5.3 per cent. of the existing issued ordinary share capital of
Merchant Retail.

The Offeror had also received a non-binding letter of intent to accept the Offer
from Standard Life in respect 4,953,678 Merchant Retail Shares, representing
approximately 4.5 per cent. of the existing issued ordinary share capital of
Merchant Retail.  Merchant Retail was notified on 21 June 2005 by Standard Life
that it had sold some of its Merchant Retail Shares and that it no longer had a
notifiable interest in Merchant Retail. Standard Life has accepted the Offer in
respect of 694,302 Merchant Retail Shares, representing approximately 0.6 per
cent. of the existing issued ordinary share capital of Merchant Retail.

The Offeror had also received a non-binding letter of intent to accept the Offer
from Schroders in respect of its holding of Merchant Retail Shares.  Following a
series of transactions between 1 June 2005 and 9 June 2005, Schroders announced
on 10 June 2005 that it had sold its entire holding of Merchant Retail Shares at
prices of between 194 pence and 194.25 pence per Merchant Retail Share.

Save as disclosed in this announcement and in the Offer Document, neither the
Offeror nor Hutchison Whampoa nor any person acting in concert with the Offeror
or Hutchison Whampoa for the purposes of the Offer held any Merchant Retail
Shares (or rights over such shares) before 23 May 2005, the first day of the
Offer Period, nor has any such person acquired or agreed to acquire any such
shares (or rights over such shares) since the commencement of the Offer Period.

3.            Consideration

The consideration will be despatched by first class post on or before 28 July
2005 to Merchant Retail Shareholders who have validly accepted the Offer on or
before the date of this announcement. Thereafter, consideration will be
despatched to Merchant Retail Shareholders who validly accept the Offer, within
14 days of receipt of an acceptance valid in all respects.

4.            Delisting and Compulsory Acquisition

Application will be made to the FSA for the cancellation of the listing of
Merchant Retail Shares on the Official List and to the London Stock Exchange for
the cancellation of the admission to trading of Merchant Retail Shares on the
London Stock Exchange, with each expected to take effect from 11 August 2005,
being 20 business days following the date of this announcement.

In addition, if sufficient acceptances are received, the Offeror intends in due
course to implement the procedures set out in sections 428 to 430F of the
Companies Act to acquire compulsorily any outstanding Merchant Retail Shares to
which the Offer relates.

Forms of Acceptance not yet returned should be completed and returned in
accordance with the instructions set out in the Offer Document and in the Form
of Acceptance so as to be received as soon as possible.

Terms used in this announcement shall have the meaning given to them in the
Offer Document.

Enquiries:

A.S. Watson
Malina Ngai (Tel: +852 2608 8408)

UBS Investment Bank (financial adviser to A.S. Watson)
Emma Goodrick (Tel: +44 (0) 207 568 0000)
Seamus Moorhead (Tel: +44 (0) 207 568 0000)
Jackie Lee (Tel: +44 (0) 207 568 0000)

This announcement does not constitute an offer to sell or the solicitation of an
offer to subscribe for or buy any security, nor is it a solicitation of any vote
or approval in any jurisdiction, nor shall there be any sale, issuance or
transfer of the securities referred to in this announcement in any jurisdiction
in contravention of applicable law. The Offer is being made solely by the Offer
Document and the Form of Acceptance accompanying the Offer Document, which
contains the full terms and conditions of the Offer, including details of how
the Offer may be accepted.

UBS Investment Bank is acting exclusively for A.S. Watson and the Offeror in
connection with the Offer and no one else and will not be responsible to anyone
other than A.S. Watson and the Offeror for providing the protections afforded to
clients of UBS Investment Bank or for providing advice in relation to the Offer.

The release, publication or distribution of this announcement in certain
jurisdictions may be restricted by law and therefore persons in any such
jurisdictions into which this announcement is released, published or distributed
should inform themselves about and observe such restrictions.

Copies of this announcement and any formal documentation relating to the Offer
are not being, and must not be, directly or indirectly, mailed or otherwise
forwarded, distributed or sent in or into or from any Restricted Jurisdiction
and persons seeking such documents (including custodians, nominees and trustees)
must not mail or otherwise forward, distribute or send it in or into or from a
Restricted Jurisdiction. The Offer (unless otherwise determined by the Offeror
and permitted by applicable law and regulation), is not being made, directly or
indirectly, in or into, or by the use of mails or any means of instrumentality
(including, without limitation, telephonically or electronically) of interstate
or foreign commerce of, or any facility of a national, state or other securities
exchange of a Restricted Jurisdiction and the Offer is not capable of acceptance
by any such use, means, instrumentality or facilities.

The Loan Notes to be issued in connection with the Offer have not been, nor will
they be, registered under the Securities Act or under the securities laws of any
state, territory, district or other jurisdiction of the United States; the
relevant clearances have not been, nor will they be, obtained from the
securities commission or any similar authority of any province or territory of
Canada; no prospectus has been, or will be, lodged with, or registered by, the
Australian Securities and Investments Commission or the Japanese Ministry of
Finance; and the Loan Notes have not been, nor will they be, registered under
applicable securities laws of any state, province, territory or jurisdiction of
Canada, Australia or Japan. Accordingly, the Loan Notes are not being, and may
not be, offered, sold, resold or delivered, directly or indirectly, in or into
the United States, Canada, Australia or Japan or any other jurisdiction if to do
so would constitute a violation of the relevant laws of, or require registration
thereof in, the relevant jurisdiction or to, or for the account or benefit of,
any US, Canadian, Australian or Japanese person.

The ability of Merchant Retail Shareholders who are not resident in the United
Kingdom to accept the Offer may be affected by the laws of the relevant
jurisdictions in which they are located. Persons who are not resident in the
United Kingdom should inform themselves of, and observe, any applicable
requirements.



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