# SECURITIES AND EXCHANGE COMMISSION

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/agency%3Asec%3A6062f75f57395d5f

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

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=

c. vmatcu. a

ROBERT W. -RON
KEVIN J. ORKHAN
W. CLAYTOPI JOHNSOM
STEPHEN Pi. MADljtN

P

enwuwn
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

I

-

SUITE LBO9,1*91A PACIFIC FIMAaCE 7-W
3 ObJPOEH ROAD. C t t i T M L
HOW0 KOIID
TLLEPHOHE: ~ s ~ - a B o D - 7 2 o o
FACSIMILE: a ~ ~ - ~ 5 0 1 . 7 2 7 2

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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Asec%3A6062f75f57395d5f. Public record. Not legal advice.