Hutchison Whampoa, the ports to telecoms conglomerate controlled by billionaire Li Ka-shing, is to buy Dutch pharmacy giant Kruidvat.

The 1.3bn euro ($1.2bn; �830m) takeover, which will give Hutchison control over the UK's Superdrug stores, will allow the formation of one of the world's largest health and beauty chains.

Kruidvat profile

Owns 1,900 outlets, including 700 Superdrug stores Has operations in six European countries Units include: Superdrug: UK ICI Paris XL: Netherlands, Belgium Rossmann: Poland, Hungary, Czech Republic

The merger of Kruidvat operations with Hutchison's existing AS Watson unit will create a business with 3,000 stores and revenues of more than 7bn euros a year.

And it will promote a Hutchison strategy of diversifying from its roots in Hong Kong.

"In view of the current difficult economic environment, it is expected that the group will focus more on opportunities in Europe, mainland China and other Asian countries in the near term," said Mr Li, reportedly Asia's richest businessman.

Competition fears

More surprisingly, the merger will see Hutchison use its European drug outlets to distribute its third generation mobile phones, the firm said.

Li Ka-shing: Head of powerful family

Hutchison has stakes in mobile operators such as Vodafone and Deutsche Telekom, and was a large investor in Orange.

The prospect of increased competition in the mobile retail sector sent shares in Carphone Warehouse almost 6% lower, although the shares recovered in afternoon trade to close up 2.5% at 83 pence.

Stock in leading UK pharmacist Boots stood 2.2% lower over fears of a strengthened Superdrug, but also recovered to close flat at 574 pence.

"Suddenly there's a very credible number two player in the UK market," said Nathan Cockrell, retail analyst at Credit Suisse First Boston.

Powerful family

Hutchison Whampoa is seen as having deep pockets with which to realise its aim of expanding its retail operations in Europe.

It announced the purchase of Kruidvat as it unveiled group-wide profits of HK$5.95bn ($763m; �487m) for the first half of the year.

And, in Mr Li, it has a boss who heads one of the richest and most powerful families in Hong Kong.

As well as Hutchison Whampoa's multiple businesses, his family interests include giant property development firm Cheung Kong and Pacific Century Cyberworks, Hong Kong's biggest phone firm.

Hutchison's takeover of Kruidvat will require approval from European competition regulators.