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Thursday 23 June, 2005

A.S. Watson

Offer Update

A.S. Watson
23 June 2005


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


                                                                    23 June 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

                  Level of Acceptances and Extension of Offer

     
1.   Level of acceptances

     A.S. Watson (P&C UK) Ltd., a wholly-owned subsidiary of Hutchison Whampoa
     Limited, announces that as at 3.00 p.m. (London time) on 22 June 2005, the 
     first closing date of the Offer, valid acceptances had been received in 
     respect of 82,026,619 Merchant Retail Shares, representing approximately 
     74.2 per cent. of Merchant Retail's issued ordinary share capital.

     Prior to the announcement of the Offer on 24 May 2005, the Offeror 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 issued ordinary share capital of Merchant Retail. Valid 
     acceptances of the Offer have been received in respect of 16,076,467 of 
     these Merchant Retail Shares, representing approximately 14.5 per cent. of 
     Merchant Retail's issued ordinary share capital.

     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 
     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 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 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 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.

2.   Extension of Offer

     The Offer, which remains subject to the terms and conditions set out in the
     Offer Document, is being extended for 21 days and will remain open for
     acceptance until the next closing date which will be 3.00 p.m. on 13 July 
     2005. (Any further extensions of the Offer will be publicly announced by 
     8.00 a.m. on the business day following the day on which the Offer was 
     otherwise due to expire, or such later time or date as the Panel may 
     agree.)

     For Merchant Retail Shares held in certificated form, Forms of Acceptance 
     should be completed, signed and returned in accordance with instructions 
     set out in the Offer Document and in the Form of Acceptance, so as to be 
     received as soon as possible and, in any event, no later than 3.00 p.m. on 
     13 July 2005. For Merchant Retail Shares held in uncertificated form, an 
     Electronic Acceptance should be made in accordance with instructions set 
     out in the Offer Document so that settlement is no later than 3.00 p.m. on 
     13 July 2005.


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 Arnott-Smith (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 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.

In accordance with normal UK market practice, the Offeror, Hutchison Whampoa,
A.S. Watson or their nominees or brokers (acting as agents) may from time to
time make certain purchases of, or arrangements to purchase, Merchant Retail
Shares outside the United States, other than pursuant to the Offer, before or
during the period in which the Offer remains open for acceptance. These
purchases may occur either in the open market at prevailing prices or in private
transactions at negotiated prices. Any information about such purchases will be
disclosed as required in the UK and communicated in the US by way of an
announcement by or on behalf of the Offeror.



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