SECURITIES AND EXCHANGE COMMISSION

UNITED S T A T E S

SECURITIES AND EXCHANGE COMMISSION

W A S H I N G T O N . D.C. 20549

D l V l S l O N OF

MARKET REGULATION

March 22>2002

Peter S. Wilson

Cravath, Swaine & Moore

825 Eighth Avenue

New York, New York.10019-7475

Re:

Offer by RWE Aktiengesellschaft for Innogy Holdings plc

Division o f Market Regutation File No.: TP 02-44

Dear Mr. Wilson:

This is in response to your letter dated March 22,2002. A copy of that letter is

attached with this response. By including a copy of your correspondencc, we avoid

having to repeat or summarize the facts you presented. The defined terms in this letter

have the same meaning as in your letter, unless othenvise notcd.

Without necessarily concurring in your analysis and based on your representations

and the facts presented in your letter, the United States Securities and Exchange

Commission (Commission) hereby grants exemptions from Section 14(d)(5) and Rule

14d-11 under the Securities Exchange Act of 1934 (Exchange Act). The Commission

grants these exemptions so that KWE may keep the Subsequent Offering Period open for

more than 20 US. business days, as permitted by the U.K. City Code on ‘rakeovers and

Mergers and as is customary in the tJnited Kingdom.

Further, the staff of the Division of Corporation Finance will not recommend that

the Commission take enforcement action if RWE terminates the Initial Offer Period and

ends withdrawal rights before the scheduled expiration of any Voluntary Extension Rot

mandated by applicable law, so long as at the time of termjnation of withdrawal rights: (i)

the Initial Offer Period has remsri d open far at least 20 U.S. business days; and (ii) alf

conditions to the Offer h a w been satisfied or waived. In this regard, we note that, in the

case of a reduction in thc minimum condition, RWE will act in accordance with the

Conmission’s interpretation set forth in Section I1.B. ofXe1ease No. 33-7759.

Mr. Peter S. Wilson, Esq.

March 22,2002

Page 2

In addition to the relief described above, the Cornmission hereby grants an

exemption from Rule 14e-5 under the Exchange Act on the basis of your representations

arid the facts presented, but without necessarily concurring in your analysis, particularly

in light of the following facts:

The Offer i s required to be conducted in accordance with the U.K. City Code on

Takeovers and Mergers (City Code);

Innogy Holdings plc (Company), a public limited company incorporated under

the laws of England and Wales, is a “foreign private issuer,” as defined in Rule

3b-4(c) under the Exchange Act;

* Any purchases of ordinary shares (Shares) of the Company by RWE (Offeror), a

company organized under the laws of the Federal Republic of Germany, or other

nominees or brokers, in each case acting as agents for Offeror (collectively, the

Prospective Purchasers), will be subject to the City Code; and

* The existence of the Memorandum of Understanding on Exchange of Information

between the Commission md the United Kingdom Department of Trade and

Industry in Matters Relating to Securities and the United States Commodity

Futures Trading Commission and the United Kingdom Department of Trade and

Q

Industry in Matters Relating to Futures, dated September 25, 1991.

The Commission grants this exemption from Rule 14e-5 under the Exchange Act

to permit the Prospective Purchasers to purchase or arrange to purchase Shares otherwise

than pursuant to the Offer, subject to the following conditions:

1. No purchases or arrangements to purchase Shares, otherwise than pursuant to the

Offer, shall be made in the United States;

2. The Offer Document shall disclose prominently the possibility of, or the intention

to make, purchases of-Shares by the Prospective Purchasers during the Offer;

3. The Prospective Purchasers shall disclose in the United States information

regardiig purchases sf Shares to the extent such information is made public in the

United Kingdom pursuant to the City Code;

4. The Prospective Purchasers shall comply with any applicable rules of the United

Kingdom Organizations including the City Code, the rules and regulations sf the:

United Kingdom Listing Authority, arid the rules md regulations of the London Stock Exchange;

5 . The Prospective Purchasers shall provide to the Division of Market Regulation

(Division), upon request, a d d y time-sequenced schedule of a11 purchases of .

Shares made during the Offer, QR a t~ansactian-by-t~~nsaction

basis,inchding:

a. size, broker (if any), time of execution, and pricc of purchase; and

b. if not executed an the Loridan Stock Exchange, the exchange,quotation

system, or other faciIity through which the purchase okeurred;

6. Upon thc request sf the Division, the Prospective Purchasers shall transmit the

information as specified in paragraphs 5.a. and 5.17. to the Division at its offices in - Washington, D.C. within 30 days of its rcqucst;

Mr. Peter S. Wilson, Esq.

March 22,2002

Page 3

7 . The Prospective Purchasers shall retain all documents and ather infixmation

required to be maintained pursuant to this exemption far a period of not Iess than

~WS

years from the date ofthe termination of the Offer;

8. Representatives o f the Prospective Purchasers shaIl be made available (in person

at the offices o f the Division in Washington, D.C.or by telephone) to respond to

inquiries of the Division relating to their records; and

9. Except as otherwise exempted herein, the Prospective Purchasers shall comply

with Rule 14e-5.

The foregoing exemptions fkom Section 14(d)(5) and Rule 14d-1 I and Rule I4e-5

under the Exchange Act and the no-action position expressed above are based solely on

your representations and the facts presented, and are strictly limited to the application of

this rule to the proposed transactions. Such transactions should be discontinued, pending

presentation of the facts for our consideration, in the event that any material change

occurs with respect to any of those facts or representations.

In addition, we direct your attention to the anti-fraud and anti-manipulation

provisions of the federal securities laws, including Sections 1O(b) and 14(e) ofthe

Exchange Act and Rule lob-5 thereunder. The participants in the Offer must comply

with these and any other applicable provisions of the federal securities laws. The

Divisions of Corporation Finance and Market Regulation express no view with respect to

any other questions that this transaction may raise, including, but not limited to, the

adequacy of disdosure concerning, and the applicability of any other federal or state laws

to, the proposed transactions.

Sincerely,

For the Commission,

By the Division of Corporation Finance

Pursuant to delegated authority,

By the Division of Market Regulation

Pursuant to delegated authority,

Mauri L. Osheraff

Associate Director (FCeguIatory Policy)

Division of Corporation Finance

Assistant Director

Division of Market Regulation

CRAVATH,

SWAINE)SL MOORE

WORLDWIDE PLAZA

M H U E L c. BUTLhA

DLORQE J. OILLEQPIB, C:

OAVlb 0 . BROWNWOOD

PAUL M. D O D W

THDHR . BROME

ROBERT 0. JOFFE

ALLEN FINKCLBON

RONALD 5. ROLCE

PAUL C. SAUNDERt3

DOUOLAS D. BIROAWdATCR

ALAN C . BTEPHENBON

MAX R. SHULMAN

STUART W.. OOtD

JOHN W. W H I T E

JOHN t. BEERBOWER

WAN A . cnLsum

PATRICIA DkOGHILCLlLw

D. COLLIER KIRKHAM

MICHAEL L. BCHLER

K A l S F. HEINZELMAN

8 . ROBE4lNB KIEQSLINO

ROGER 0 . TURHEW

PHILIP A. OfLEiTON

AORY 0 . CIILL@DN

NEIL P. WES7REICH

FRANC15 P. M A O N

RLCHMD W. CLAW

8 2 5 EIGHTHAVENUE

NEWYORK, NY !0019-7475

TELEPHONE: (2121 474-1000

F A C S I M I L E : (ZlE!) 4 7 4 - 3 7 0 0

W L L l a M P. ROGER%. J A .

JAMES 0. COOPER

5TEPHLH L. GORDON

DANEL L. HQBLEY

OREGORY M. 5HAW

PEYER 9. WIL3ON

JAM=

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ROBERT W. -RON

KEVIN J. ORKHAN

W. CLAYTOPI JOHNSOM

STEPHEN Pi. MADljtN

P

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ONE ROPCNARCA STREET

COI~DOHBCLV a m ENOUPIO

T m E P n o w : a 4 . 2 0 7 - 4 ~ 1.Iooo

FACSIMILE: 4 4 . L 0 7 . B B D . I 150

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WRITER'S DIRECT D I A L NUMBER

C . ALLEN PARKlfR

MARC 8 . R086NBLRa

WILLIAM 8 . ORAMMAN

( 2 1 2 ) 474-1767

LEWIS R. DTLINOERO

CONFIDENTIAL TREATHEWE REQUESTED

Securities Exchange Act of 1934

- - Sections 14(d) and 14(e)

a d Rules 14d-11 and 1 4 e - 5

March 21, 2002

Recommended Cash Of f e r 2 RWE Aktiengesellschaf

-.---.--..--...

t f o r I n n o w Holdinqs p l c

_

_

I

I

.

L a d i e s and Gentlemen:

We are writing on a confidential basis on b e h a l f of RWE

Aktiengesellschaft (I1RWE1l),

a company organized under the l a w s of the

Federal Republic of Germany. RWE, directly or t h r o u g h a subsidiary,

intends to make a c a s h tender o f f e r (the llOfferl') f o r a l l the outstanding

ordinary shares, nominal v a l u e l o p per share'(the "Ordinary Shares"), of

1nnog-y Holdings plc, a public limited company incorporated under the laws

) , all the American Depositary Shares

of England and Wales ( 9 1 1 n n o g y 1 fand

representing O r d i n a r y Shares ( t h e I ' O r d i n a r y A D S s k q ) . RWE expects that t h e

Offer woyld be recommended by the d i r e c t o r s of Jnnogy. R W E currently

intends to announce the O f f e r at the opening of business (London T i m e ) . on

March 22, 2002, or soon thereafter (the 'IAnnouncement Date*').

We respectfully request that t h e Securities and Exchange

Commission ( t h e "Commissionlvbgrant (i.1 exemptive relief from Section

1 4 f d ) (5) of the Securities Exchange A c t of 1934, as amended (the "Exchmge

Act") and Rule 1 4 d - l l t h e r e u n d e r , so as to permit W E , under c e r t a i n

circumstances, to keep t h e Subsequent Offering Period (as defined below

u n d e r P r o p ~ s e dO f f e r S t r u c t u r e ) open beyand 20 U.S. b u s i n e s s days' and (ii)

' We believe %he exemptive r e l i e f we are requesting with respect t.0&he subsequent o f f e r i n g period is consistent w i t h t h e r e l i e f g r a n t e d by

the C o m i s s i o n in the following no-action l e t t e r s : S c h l u m e r g e x Limited

,

O f f e r f o r Sema ppc: (available ~ u l y2 , 20011; Amerada Hess Corporation

2

exemptive relief from Rule 14e-S under t h e Exchange A c t . 2 In addition, we

are requesting that the Commission confirm that termination of any

voluntary extension of the I n i t i a l Offer Period (as defined below under

Proposed O f f e r Structure) p r i o r to the scheduled expiration of such period

will not be inconsistent with t h e applicable rules and regulations under

the Exchange A c t sa long as t h e following conditions are met: (i) the

Initial O f f e r P e r i o d has been open for at least 20 U.S. business days and

(ii) all conditions of the O f f e r have been satisfied ox waived.

BACKGROUND

1nnog-y Holdings p l c

Innogy, headquartered in Swindon, England, is a "foreign

private issuer" as defined in Rule 3 b - 4 ( c ) under the Exchange A c t .

According to Innogy's Form 20-F f o r t h e fiscal year ended March 31, 2001,

Innogy is a vertically integrated U . K . energy group. It is comprised of

the following lines of b u s i n e s s : retail, trading and asset management,

operations and engineering, cogeneration and renewables and new ventures.

Innogy was formed as part of a demerger of National Power plc i n t o two

independent publicly traded companies in October 20001 For the fiscal year

ended March 31, 2001, in accordance with accounting principles generally

accepted i n the U n i t e d Kingdom, Innag-y had group t u r n o v e r of L 3 . 9 billion

and retained profit of 5132 million. A t March 31, 2001, Innogy had total

a s s e t s of €3.2 b i l l i o n .

'

The principal trading market f o r Ordinary Shares is t h e London

S t o c k Exchange plc ( t h e IfLondon Stock Exchange"). The Ordinary ADSs,

which are evidenced by t h e American Depositary aeceipts, are listed on the

New York Stock Exchange, Inc. Each Ordinary ADS represents ten Ordinary

Shares. Ordinary Shares and Ordinary ADSs are registered pursuant to

Section 1 2 b ) of the Exchange A c t .

On the basis of publicly available information, RWE believes

t h a t U.S. beneficial holders hold more t h a n 1 0 % but less than 408 Of the

Ordinary S h a r e s (including those represented by Ordinary A D S s ) . More

particularly, based in part on a beneficial ownership report of Ordinary

Shares dated F e b r u a r y 7 , 2002, published by Citywatch, it was determined

that as of the date of the r e p o r t U . S . holders o w e d approximately 187

million Ordinary Shares (including t h o s e represented by Ordinary A W s )

I

O f f e r f o r W M O plc (available December 13, 2000); and Air P r o d u c t s and

Chemicals, Inc. and L'Air L i q u i d e , § . A . O f f e r f o r BQC Group plc (available

Wxeh 10, 2000) .

We believe t h e exernptive r e l i e f we are requesting with respect to

Rule 14e-5 is consistent w i t h t h e r e l i e f granted by the Commission in the

following no-action l e t t e r s : Vinci o f f e r f o r TBX plc {available August 2 3 ,

2001); Schlumbesger L i m i t e d O E f e r f o r Sema plc (available F e b r u a r y 15,

91001) ; St David Capital p l c Offen for Hyder plc (available August 1,

20001 ; WPD L i m i t e d O f f e r f o r Hyder plc (available May 3 1 , 2 0 0 0 ) ; St David

Capital. plc O f f e r Ear Wyder p l c (available April 17, 2 0 0 0 ) ; arid BP Mac0

p . 1 . c . O f f e r f o r B u m a h Castrol PIC (available Marsh 1 3 , 2000).

.

3

which constitute 16.7% of t h e total outstanding Ordinary Shares (including

t h o s e represented by O r d i n a r y ADSs). RWE believes no shareholder holds

more than 10% of t h e Ordinary Shares (including those represented by

Ordinary AD%) .

RWE Aktiengesellschaft

RWE is a global multi-utility company that does business,

through its subsidiaries and affiliates, in over 120 countries. Its core

businesses are electricity, gas, water, and waste and recycling. RHE is

headquartered in Essen, Germany. For the year ended June 30, 2001, in

accordance with International Accounting Standards, Rp3E had net sales of

E62.9 billion and n e t p r o f i t of E1.3 billion.

T h e principal trading market f o r shares of RWE is the

Frankfurt Stock Exchange. Shares of RWE are not l i s t e d on any national

securities exchange o r quoted on The Nasdaq S t o c k Market, Inc. RWE

furnishes c e r t a i n information to the Commission p u r s u a n t to Rule 1293-2 (b)

under the Exchange A c t .

PROPOSED OFFER STRUCTURE

The O f f e r will be made in cash3 and will be structured as a

single offer made concurrently i n t h e United Kingdom, t h e United S t a t e s

and certain o t h e r jurisdictions where the O f f e r may be legally extended.

In accordance w i t h customary practice in t h e United Kingdom, the O f f e r

will be made on behalf of RWE by RWE's f i n a n c i a l advisor.

The O f f e r will be structured to comply with (i) the rules and

r e g u l a t i o n s of the United Kingdom L i s t i n g Authority and the London Stock

Exchange, (ii) The City Code ori Takeovers and Mergers ( t h e I I C i t y Code") of

the United Kingdom, and ( i i i ) except as otherwise requested, Regulations

14D and 14E under t h e Exchange Act as they apply to o f f e r s t h a t satisfy

t h e conditions of Rule 14d-l(d)(I) (a 'ITiex I1 offer"). RWE's p r i m a r y

objective in structuring t h e O f f e r is to allow f o r participation by

holders of the Ordinary Shares in t h e United Kingdom and the United S t a t e s

and holders of Ordinary WDSs, while complying with t h e generally

applicable requirements in those jurisdictions to they greatest extent

practicable. The offer document used i n connection with t h e Offer (the

" O f f e r Ddcument") will be prepared with a view to complying with the

' Innogy shareholders ( o t h e r than United S t a t e s shareholders and

c e r t a i n o t h e r overseas shareholders), who validly accept the Offer w i l l be

able to elect to receive Loan Notes instead o f some OK all, of the cash to

which they would o t h e r w i s e become entitled under t h e terms of the Offer.

Loan Notes provide c e r t a i n tax advantages to U . K . taxpayers. R W does not

propose to r e g i s t e r t h e o f f e x i n g of Loan 'Mates under the Securities A c t of

1933, as amended ( t h e l l S e c u s i t i e s A e t 1 # ) , but, rathex, intends to r e l y on

Rule 903 of R e g u l a t i o n § under the Securities A c t . Shareholders electing

to receive Loan Pirates will be r e q u i r e d ECJ c e r t i f y t h a t they are n o t U.S.

p e r s o n s (as deEined in Regulation S). ?'he Loan Notes will not be listed on

any U P S . national securities exchange or quoted on The Hasdaq Stock

Market, I n c .

4

applicable rules and regulations of t h e United Kingdom Listing Authority

and the London Stock Exchange and w i t h the City Code and, except as

otherwise requested herein, the Exchange A c t .

The O f f e r Document will be mailed to all h o l d e r s of the

Ordinary Shares in the United Kingdom and t h e United States and holders of

Ordinary ADSs within 28 days of the Announcement Date, as required by Rule

30.1 of the City Code. The Offer will remain apen for acceptance and

withdrawal until the date it becomes or is declared unconditional (the

"Initial Offer P e r i o d " ) . T h e Initial Offer Period cannot be less t h a n 20

U . S . business days (from t h e mailing of t h e O f f e r Document) and can be

extended f o r such additional period or periods as may be determined by RWE

( V o l u n t a r y Extensions") and as may be mandated by the provisions of

Regulations 14D and 148 under the Exchange Act (subject to any exemptive

relief granted herein) or the C i t y Code ("pnlandatory Extensionst1) but n o t

beyond midnight on the 60th calendar day a f t e r mailing or such later date

as to which The Panel on Takeovers and Mergers ( t h e llPanel"),which

administers the C i t y Code, may agree.

Once the O f f e r becomes or has been declared unconditional

(i.e.? all conditions of the O f f e r have been satisfied or, where

permissible, waived), RWE will have acquired all Ordinary Shares and a l l

Ordinary ADSs with respect to which it has received valid acceptances

(which have not b e e n withdrawn) during t h e Initial Offer Period and will,

in accordance w i t h the City Code, pay fox a l l such accepted Ordinary

Shares and Ordinary MISS within 14 calendar days.

If t h e O f f e r becomes or is declared unconditional, the O f f e r

must, i n order to comply with the City Code, remain open f o r acceptances

f o r at least 14 calendar days following the date on which it would

otherwise have expired and may remain open f o r such longer period as RWE

deems appropriate (the "Subsequent O f f e r i n g Periodr8)- All valid

acceptances received during the Subsequent Offering Period will be p a i d

f o r w i t h i n 14 calendar days of t h e date of r e c e i p t . As permitted by the

City Code and i n accordance with U . K . practice, RWE intends to keep the

Subsequent Offering Period open at least until t h e compulsory acquisition

procedures under the U.K. Companies A c t 1985 (the "Companies Act") are

completed (whish would normally be three months a f t e r an o f f e r becones

unconditional). Rule 31.2 of the City Code requires that notice of the

termination of the Subsequent Qffering Period must be given n o t less than

14 calendar days prior to such termination. During t h e Subsequent Offering

Period, acceptances (whether received before or during t h e Subsequent

OEfering Period) will, n o t be capable of withdrawal.

Holders will be able to withdraw acceptances at m y tirne.prior

t~ the specified time on the last day of the I n i t i a l Q f f e r Period. If RWE

were to waive a material offer condition w i t h i n the meaning of Rule 14d4 ( d ) , RWE would, in t h e absence of any exemptive relief granted by t h e

Commission, follow t h e procedures discussed in Release Ma. 34-24296 (April

3 , 1987) and extend the Initial. O f f e r Period (during which holders are

able ta withdraw acceptances) f o r t h e applicable period of time. However,

RWE may voluntarily extend the I n i t i a l . O f f e r Pexiad when it i s n o t

required to do SO under e i t h e r the Exchange Act or t h e applicable r u l e s .

and regulations t h e r e u n d e r or t h e City Code. If RWE were to voluntarily

extend t h e I n i t i a l O f f e r P e r i o d , i n E ~ C C Q L - ~ ~ Mwith

X

U . K . practice, RWB may.

terminate this period before its scheduled expiration date but to

accommodate the requirements of the Exchange A c t will do so only if the

following conditions are met: (i) t h e Initial O f f e r Period has been open

f o r at least 2 0 U.S. business days and (ii) all conditions of the Offer

have been satisfied or waived. Termination of t h e Initial Offer Period in

these circumstances eliminates the uncertainty that would otherwise

prevail i f the Offer were to be treated as i f it was still conditional,

when in fact it is n o t , and enables accepting shareholders to receive

their o f f e r consideration at an earlier d a t e . RWE anticipates that, in

practice, any such early termination of a Voluntary Extension will occur

o n l y after RWE has given notice of a reduction in the percentage threshold

in t h e acceptance condition as described below.

In accordance with the Commission's interpretation s e t forth

in Section 1I.B of Release No. 33-7759 ( t h e "Cross-Border ReleaseBi),the

Offer will provide that RWE will make an announcement five U.S. business

days p r i o r to the date on which any reduction i n the percentage threshold

i n the acceptance condition may be effected, stating the percentage to

which t h e acceptance condition may be reduced. Any such announcement will

be made through a press release and by placing a n advertisement in a

newspaper of national circulation in the United States. Any such

announcement will advise shareholders to withdraw their acceptances

immediately if their willingness to accept t h e O f f e r would be affected by

a reduction of the acceptance condition. In addition, disclosure regarding

the procedure f o r r e d u c i n g the acceptance condition w i l l be included in

the Offer Document.

THE SUBSEQUENT OFFER PERIOD AN13 RULE 14D-11

P u r s u a n t to Rule 14d-11 under the Exchange Act, offerors may

elect to provide a Subsequent Offering Period of from three U.S. business

days to 20 U.S. business days during which tenders will be accepted, if

certain conditions are s a t i s E i e d , b u t during which withdrawal rights will

not apply.

As indicated above, in the United Kingdom transactions are

usually structured so as to keep t h e Subsequent Offering Period open for a

period longer than the mandatory 34 calendar days under t h e City Code, and

longer than the 20 U.S. business days provided for under Rule 14d-11,

o f t e n indefinitely, QIP at least until t h e ~ ~ m p u l s o racquisition

y

procedures are completed (which would normally be three months after .an

offer becomes unconditional) so as to receive acceptances of 90% of t h e

t a r g e t company's outstanding shares and allow employees whose options v e s t

on a change of c o n t r o l ( u s u a l l y when an offer is unconditional) to .

participate in the o f f e r . S

times an offeror announces t h a t t h e

Subsequent O f f e r i n g Period will. be h e l d open until further notice. In

these circumstances, under t h e City Code, t h e o f f e r o r must give 1 4

calendar days notice p r i o r ta clssing the Subsequent Offering Pexigad.

RWE's goal is t h e acquisition of l U O % ownership of Innogy. In

a typical tender o f f e r Ear a U.S. company, 100% ownership can be achieved

through a second-step merger once a majority (or sometimes two-thirds] oft h e target company's stock is acquired in t h e tender o f f e r . However, in a

tender offer f o r a U . K . company, 100% ~ w n e r s h i pcan be achieved t h r o u g h

.

6

compulsory acquisition procedures only if, broadly, at least 90% of the

target company's outstanding shares are acquired. Accordingly, f o r RHE's

goal of 100% ownership to be achieved, 90% of the Ordinary Shares

(including those represented by Ordinary ADSs) must be accepted in the

Offer or be acquired in compliance with the Companies A c t by Q+ on behalf

of RWE while the O f f e r is open f o r acceptance.

The expectation is that additional acceptances in the

Subsequent O f f e r i n g Period w i l l cause the 90% goal to be reached and that

the Subsequent Offering Period will be extended as permitted by the City

Code to achieve t h e 90% goal. Provided such 90% level is reached w i t h i n

four months a f t e r t h e date t h e o f f e r document is mailed to the target's

shareholders, an o f f e r o r is t h e n entitled to acquire the target company's

remaining shares on the same terms as the o f f e r pursuant to t h e compulsory

acquisition provisions in the Companies A c t .

RWE t h u s seeks permission to allow t h e Subsequent Offering

Period t o remain open for longer than 20 U.S. business days, in accordance

with t h e City Code and the U.K. procedure as stated above. We do not

believe that this request represents a material departure from the

requirements of the Exchange Act, as w e understand that a l l Ordinary

Shares and Ordinary ADSs with respect to which acceptances have been

received during the Subsequent O f f e r i n g Period will, as a matter of

English contract law, be acquired immediately upon receipt of t h e

acceptances ( i . e - ,ownership will p a s s to RWE on receipt of t h e

acceptance) and p a i d f o r within 14 calendar days as r e q u i r e d by Rule 31.8

o f the City Code.

-

The O f f e r will be subject to several other conditions which

are generally customary f o r U . K . o f f e r s of this t y p e , including obtaining

European antitrust clearance.

PURCHASES OUTSIDE THE OFFER AND RUfiE 14E-5

In the United Kingdom, purchases outside t h e Offer are

permitted, s u b j e c t to certain limitations, and such purchases are cOmm

in connection w i t h o f f e r s f o r U . K . companies. Under the City Code, RWE and

its advisors and brokers are permitted to purchase Ordinary Shares in t h e

open market or otherwise p r i o r to and during the conduct o f , but outside,

the O f f e r , s u b j e c t to c e r t a i n limitations, including as to price (as

described below) -

.

S u b j e c t to certain exceptions, Rule 14e-5 prohibits a covered

p e r s o n from d i r e c t l y or indirectly purchasing or arranging to purcha-se any

securities to be acquired in

t e n d e r o f f e r f o r eguity securities or any

securities h=mediately convertible i n t o , exchangeable f o r or exercisable

fox such S e c u r i t i e s , except as part of t h e tender o f f e r . This prohibition

applies from the t i m e the o f f e r is publicly announced uneil it expires.

R u l e 14e-5 d e f i n e s a covered p e r s o n as (i) t h e offeror, i t s dealermanagers and any oE their respective affiliates, tii) any advisors to &he

foregoing whose compensation is dependent on t h e carnpletian.af t h e o f f e r

and ( i i i ) any p e r s o n acting in concert either directly ox indirectly with

any o f t h e f o r e g o i n g . P u r c h a s e s by RWE and o t h e r covered persons a c t i n g an

i t s b e h a l f of O r d i n a r y Shares o u t s i d e t h e Offer would n o t fall w i t h i n any

7

of the excepted activities specifically outlined in Rule 14e-5.

Accordingly, in the absence of exemptive r e l i e f , such purchases would be

prohibited after the public announcement of the O f f e r .

Rules 6.1 and 6.2 of t h e C i t y Code provide protections similar

to those provided by Rule 14e-5, making exemptive relief appropriate in

the circumstances of the O f f e r , by requiring that t h e Offer price be

increased to t h e level of any h i g h e r purchase price outside the Offer. In

addition, under Rule 8.1 of the City Code any purchases outside the Offer

by any party t o t h e transaction (including the o f f e r o r and any advisor,

broker or other financial institution acting as its agent) are required to

be disclosed on a next-day basis to the London Stock Exchange and the

Panel and this information is available f o r public inspection at the

COKLpany Announcements Off ice of the London S t o c k Exchange. Disclosures Of

these purchases attract significant publicity by their very nature and

they are disseminated on dealers' trading screens throughout the London

market.

Please note that, in our view, t h e r e are serious doubts as to

whether the jurisdictional predicate f o r the application of the Kxchange

Act--namely that there be a purchase of a security "by use of the mails or

by any means or instrumentality of interstate commerce or of any facility

of a national securities exchange'?--wouldbe satisfied if RWE, or

financial institutions acting on its behalf, made purchases of, or

arrangements to purchase, Ordinary Shares outside t h e United States. We

nonetheless a p p l y , on behalf of such p e r s o n s , for exemptive r e l i e f f o r

such purchases from t h e provisions of Rule 14e-5 p u r s u a n t to Rule 14e-5,

on t h e conditions set forth below. We have been requested by RWE to

emphasize that this letter does n o t r e f l e c t an admission that Rule 14e-5

would apply to such purchases of Ordinary Shares outside the United States

in the absence of such exemptive relief.

IRREVOCM3LE UNDERTAKINGS

Certain large institutional shareholders as well as the

d i r e c t o r s of Tnnogy, in each case outside of t h e United States, may be

asked to, as is typical in U . K . takeovers, u n d e r t a k e irrevocably to accept

the O f f e r in respect of t h e i r holdings of O r d i n a r y Shares. No additional

compensation will be paid to these shareholders and t h e y w i l l receive

their of'fer consideration at t h e same time as t h e o t h e r Tnnsgy

shareholders that accept t h e O f f e r .

.

.

Under U . K . practice, an irrevocable undertaking is an

agreement of a shareholder to accept an o f f e r when made and, in some

cases, to not accept a competfng o f f e r d u r i n g the pendency o f the f i r s t

o f f e r . An irrevocable undertaking is nat treated by t h e City Code as a

purchase, and t h e City Code permits bidders to e n t e r into i ~ r e v o c a l e

undertakings at any time, subject to certain limitations. We n o t e f o r

emphasis that shares subject ta an ik-revscable undertaking are purchased

i n the t e n d e r o f f e r , and consequently, c o u n t towards satisEying the

minimum acceptance condition under t h e C i t y C ~ d e .Acceptances of the O f f e r

in respect of shares which are the s u b j e c t of; irrevocable undertakings

represent t e n d e r s subject to b o t h t h e terms and conditions of t h e O f f e r

8

and t h e City Code. Accordingly we are n o t requesting exemptive relief from

Rule 14e-5 with respect to the entering into of irrevocable undertakings.

REQUESTED EXEMPTTVE: RELIEF AND CONFIRMATTON

Based on the foregoing, we respectfully request on behalf of

RWE exemptive relief for t h e O f f e r from the provisions of Section 14(d) ( 5 )

of the Exchange A c t and Rule 14d-11 thereunder, to permit RWE to keep the

Subsequent Offering Period open beyond 2 0 U.S. business days in compliance

with the C i t y Code.

Also, w e request that the Commission confirm that termination

of any voluntary extension of t h e Initial Offer Period p r i o r to the

scheduled expiration of such period will n o t be inconsistent with the

applicable rules and regulations under t h e Exchange A c t so long as the

following c o n d i t i o n s are met: (i) t h e I n i t i a l O f f e r Period has been open

f o r at least 20 U.S. business days and (ii) all conditions of the O f f e r

have been satisfied or waived.

F i n a l l y , we respectfully request that RWE and any advisor,

broker or o t h e r financial institution acting as its agent (the

"Prospective Purchasers@'),

be granted exemptive r e l i e f from the provisions

of R u l e 14e-5 in order to permit purchases of Ordinary Shares outside the

O f f e r by any Prospective Purchaser t h a t would otherwise be prohibited by

Rule 14e-5, s u b j e c t t o the following conditions:

(a) no purchases o r arrangements t o p u r c h a s e Ordinary Shares,

otherwise t h a n pursuant to the O f f e r , w i l l be made i n t h e United

States;

(b) disclosure of the possibility of s u c h purchases by the

Prospective Purchasers, otherwise than pursuant to the Offer, will

be included prominently in t h e Offew Document;

(c) t h e Prospective Purchasers shall disclose in the United

States information regarding such purchases to the extent such

i n f o r m a t i o n is made public in the United Kingdom p u r s u a n t to t h e

City Code;

(a) t h e Prospective Purchasers shall comply with any

applicable r u l e s of U . K . organizations, including the City Code and

the r u l e s and regulations of t h e United Kingdom Listing Authority

and the London Stock Exchange;

( e ) the Prospective P u r c h a s e r s shall disclose to the Division

of Market Regulation sf the C a m i s s i o n ( t h e * g D i v i s i o nof Mazket

Regulation") , upon request, a daily time-sequenced schedule of a l l

purchases of Qrdinary Shares made by any a € them during t h e O f f e r ,

on a t r a n s a c t i o n - b y - t r a n s ~ ~basis,

~ ~ Q ~ including: (1) s i z e , broker

( i f any), time ~f execution and price o f p u r c h a s e ; and (2) if n o t

executed an t h e London S t o c k Exchange, t h e exchange, quotation

system or o t h e r facility t h r o u g h which the purchase occurred;

9

(f) upon request of the Division of Market Regulation, the

Prospective Purchasers s h a l l transmit the information s p e c i f i e d in

clauses (el (1) and ( e ) (2) above to the Division of Market Regulation

at its offices i n Washington, D.C. within 30 days of its request;

(9) the Prospective Purchasers shall retain a l l documents and

other information required to be maintained pursuant to this

exemption for a period of n o t less than t w o years from t h e date of

the termination of the O f f e r ;

(h) representatives of t h e Prospective Purchasers shall be

made available ( i n person a t the offices of the Division of Market

Regulation in Washington, D.C. or by telephone) to respond to

inquiries of the Division of Market Regulation relating t o s u c h

records; and

(i) except as otherwise exempted h e r e i n , the Prospective

Purchasers s h a l l comply w i t h Rule 14e-5.

CONCLUSION

Pursuant to R e g u l a t i o n 2 0 0 . 8 1 , we respectfully request on

behalf of RWE that this no-action and exemptivc request and the response

be accorded confidential treatment u n t i l 120 days after the date of t h e

response to such request or such earlier date as the staff of t h e

Commission is advised that a l l of the information in this l e t t e r has been

made p u b l i c . This request for confidential treatment is made on behalf of

RWE for the reason that certain of t h e fasts set f o r t h i n this letter have

not been made public.

I n compliance w i t h S e c u r i t i e s A c t Release No. 6269 (December

5, 1980), seven additional copies of this letter are enclosed.

10

In v i e w of the short timetable, we respectfully request t h a t

the Commission i s s u e t h e requested exemptive r e l i e f and confirmation as

soon as practicable. If you require any further information or have any

questions, please contact me at (2121 474-1767 or Varun Gupta of this

o f f i c e at (212) 4 7 4 - 1 3 5 4 .

Peter S. Wilson

Dennis 0. Garris, E s q .

Chief

O f f i c e of Mergers and Acquisitions

Division of Corporation Finance

Securities and Exchange Commission

450 F i f t h S t r e e t , N.W.

Washington, D.C. 20549

James A. Brigagliano, Esq.

Assistant Director

O f f i c e of Risk Management and C o n t r o l

Division of Market Regulation

Securities and .Exchange Commission

4 5 0 F i f t h S t r e e t , N.W.

Washington, D.C. 2 0 5 4 9