It comes just 13 months after Kruidvat bought Superdrug from Kingfisher. The British retail group had originally intended to float the chemists chain along with Woolworths.News of the deal hit shares in Boots, the market leader, which recovered from an initial fall of 3 per cent to close down 1.5p at 574p in a rising market.Analysts said Boots was likely to face stiffer competition. “Suddenly there’s a very credible number two player in the UK market,” said Nathan Cockrell, a retail analyst at Credit Suisse First Boston.Matthew McEachran, at Investec Securities, added: “Being owned by Hutchison is seen as being more of a threat than Kruidvat.”Hutchison said its acquisition of Kruidvat, which is dependent on regulatory approval from Brussels, was the latest move in its strategic expansion into Europe’s retail market. It already owns Savers, a UK-based chain of chemists, which has more than 100 outlets.”Kruidvat was chosen for its exceptional reputation and market leader position. It is an excellent fit for our expanding retail business, giving us a more diversified portfolio and better geographical balance,” Canning Fok, Hutchison’s group managing director, said.Mr Fok, who was speaking as Hutchison announced its half-year financial results, said the Kruidvat outlets would be used in part to distribute 3G phones. Until yesterday, the secretive mobile phone operator has kept its plans for retail distribution a secret.John Barton, sales director of Hutchison 3G UK, said the acquisition would provide 3 “with great reach across the market in a new and exciting setting, providing the opportunity to bring 3 services to the UK high street”. 3, which paid £4.4bn for one of the five 3G licences distributed by the Government in 2000, is poised to be the first group to launch a service in the UK in October.While the suggestion that the new handsets would be available in Superdrug outlets initially hit shares in Carphone Warehouse, they later recovered to close up 2p at 83p.Mr Barton added that while “new channels are vital to our success, traditional partners in this sector are important”, sparking speculation that the group was close to announcing further reseller agreements.Analysts, who remain highly sceptical that consumers will embrace the new technology, last night questioned the wisdom of selling phones aimed at social class AB users in outlets frequented by CD shoppers..

Rolls-Royce shares surged 15 per cent yesterday to 154.5p after investors breathed a sigh of relief that the battered engine producer has begun to pull itself out of the post-11 September gloom. The company said that if its pension shortfall remained at this level, it would plough £35m extra contributions into the fund.The deficit on Rolls-Royce’s pension, along with many others among FTSE 100 companies, has been known about for some time and news that the company might increase provisions next year did not faze the City.The company, which makes 50 per cent of its revenues from manufacturing and servicing the engines of aeroplanes, unveiled the impact of the slump in the aviation market.Underlying pre-tax profits nearly halved to £104m in the six months to 30 June. Deliveries of civil aero-engines fell sharply during the period from 670 to 405, while revenues dipped 9 per cent to £2.76bn.Some analysts had raised concerns that last week’s decision by American Airlines to ground its entire fleet of Fokker 100s, which are powered by Rolls-Royce engines, could hit the engine maker hard.American Airlines is the world’s largest operator of this type of aircraft. Its decision to ground the fleet comes after US Airways, which last week filed for bankruptcy protection, grounded its own Fokker 100s, raising the prospect that 40 per cent of the Rolls-Royce powered aeroplanes could soon stand idle.Mr Rose signalled that he thought there could be further collapses among US airlines. But he added that such an eventuality was taken into account in Rolls-Royce’s October profit warning.At that time Rolls-Royce announced it would cut 6,000 jobs, with 1,000 of that number coming from contract staff and 5,000 from its permanent workforce.The company said 5,500 staff had been laid off and the remaining 500 redundancies would come this year.

It said it was on track to produce annual costs savings of £250m by 2004.. The head of Wessex Water was arrested yesterday on suspicion of taking a £1m bribe as part of the £1.2bn sale of the British utility company to a Malaysian energy group. Mr Skellett, 57, who has three children, is also non-executive chairman of the rail maintenance firm, Jarvis. Its subsidiary is at the centre of investigations into the cause of the Potters Bar train crash, which killed seven.Wessex Water, which supplies drinking water to 1.2 million people and sewerage services to 2.5 million in the South-west, was bought by YTL Power last March. Previously, Wessex had been controlled by Enron, the US energy company that went bankrupt last year after it was found to have hidden millions of dollars of debt.Last night, Mr Skellett was being held at Staple Hill police station in Bristol for questioning. He is being investigated under the Prevention of Corruption Act 1906 for allegedly receiving a corrupt payment of “nearly £1m”, City of London Police have confirmed.A spokesman said: “The investigation is focused only on the suspected payment to the official and there is no suspicion of general mismanagement within Wessex Water.”Yesterday, police completed a search of Mr Skellett’s home and office in Bath.