22 March, 2002 – Innogy, the UK’s largest electricity supplier today announced that it had accepted a 275p-a-share offer from RWE, the German multi-utility. The move will leave more than half the UK power industry in foreign ownership.

The deal, agreed by the Innogy board last night, values the company at £3.1bn ($4.4bn) and in addition, RWE will assume approximately £2.1bn of debt.

Innogy was demerged from the National Power group and retails electricity in the UK under the nPower brand. It is the UK’s leading integrated energy company with around 4.7 million electricity customers and some 1.9 million gas customers. The acquisition will boost RWE’s position in the utilities field within the UK, having already bought Thames Water in October 2000. Upon completion of the transaction, RWE will have approximately 20 million energy customers.

Across Europe, the RWE Group will generate approximately 211 TWh and supply some 321 TWh, making RWE the number two player in generation and number three in supply.

RWE’s UK energy trading and supply activities will be combined with Innogy’s business to create Innogy, part of the RWE Group. Overall risk management will be integrated in the RWE headquarters. The headquarters of Innogy will remain in Swindon, United Kingdom. The Chief Executive of Innogy, Dr. Brian Count, will report directly to Dr. Dietmar Kuhnt, Chairman of the management board of RWE.

In the UK utility market, RWE will be able to promote its multi-utility strategy by offering customers a variety of essential services, including water, electricity and gas. The significant increase in RWE’s UK customer base will provide opportunities to create value. RWE say the transaction is expected to be earnings per share accretive on a pre-goodwill basis in the first full year following completion.

Commenting on the Offer, Dr. Dietmar Kuhnt, Chief Executive of RWE, said, “We are extremely pleased to have reached agreement with Innogy. Innogy is the UK’s leading integrated electricity business and this transaction significantly enhances our multi-utility strategy, particularly in the UK. Innogy’s flexible generation portfolio and strong customer skills will be of real value to the RWE Group. Innogy is an outstanding business with a strong management team and this combination will deliver substantial benefits to both RWE shareholders and Innogy customers alike.”

Ross Sayers, Chairman of Innogy, said, “The Board of Innogy is pleased to recommend this offer from RWE to its shareholders. Shareholders will receive full value and Innogy staff will benefit from being part of a much larger international group. Since demerger we have created substantial shareholder value which in the board’s view is properly recognised in the RWE offer.”

Dr. Brian Count, Chief Executive of Innogy, said, “This announcement marks the culmination of the Innogy management team’s efforts over the last three years. In that time we have established Innogy as a leading player in the UK market and demonstrated our ability to deliver strong results. This new combination will present further opportunities to enhance our leading position in the UK and to share skills within the RWE group. I look forward to leading Innogy on the next stage of development with RWE.”

Merrill Lynch is acting as financial adviser and corporate broker to RWE and Credit Suisse First Boston and Deutsche Bank are acting as joint financial advisers and corporate brokers to Innogy.

The offer represents a premium of approximately 31 per cent to the Closing Price of 210p per Innogy Share on 15 February 2002 – the last business day prior to the announcement by Innogy confirming that it had received approaches. It represents a premium of approximately 36 per cent to the average closing price for the one month prior to that announcement.