SEC Division of Corporation Finance no-action letter: Gas Natural SDG, S.A.

szsL-GTON A-

NEW N.Y. I~17e.9-

(21A459~iXxi

VIA Em.AND FEDERAL EXPRESS.
Saarities and Exchange Commission
100'FStreet,N.E.
Washington, D.C. 20549
Attn: Brian 'V.Breheny; Esq.
Chiec Office of Mergm and Acquisitions
Division cif Corporation Finance
Christina E. Chalk, Esq..
Special Comsd, Office of Merger :md~AquiS'ititians Division ~fCorporation Finance Mami L.Oshaoff, Esq. hsociiite Director, Office cif Regulatov Division of ~o~r&on Finance James A.Brigagliam, Esq. Act* Associate Director,'Divisionof Market.-Regulation Ladie ndGentlemen:
We are writing on behalf of our client Gas Natural SDG, S.A., a limited liability company organized under the laws of the Kingdom of Spain (Was Natural?'),which intends to make exchange offm (asmore fully described below) to acquire 100% of the ordinary sham, nominal value €1 -20per share (the "Endesa 0rdim-yShares"), and American Depositary Shares, eachrepresentingone Ordinary Share (the "EndesaADSs'kd bgeh with the Endesa Ordinary Shares, the ''Endma Shares"), of Endesa, S.A., a limited liability company organized under 2he laws ofthe XCingdum ofSpain rEndesa"), iaexchange for cash and newly issued securities of Gas Natutal. In accordance with the requirements of applicable Spanish takeover regulations, Gas NaturaI publicly announced theproposed exchange off's on September 5,2005, but the offers may not be (;ommad until certain antitrust and other regulatory approvals are obtained in Spain. As previously discussed with members of 'theStaff (the "Staff') of the Securities and Exchange Commission (the."Commission'?],Gas Natwal intends to wea dual offer,s?ruotweto acquirethe Endesa Shws-inwhich GasNkmd wouldmake concurrent offers in the United LOS ANGELES PALO&TO WASPINQT.QN,I3.C. HONGKo~o L6.b~ncim 'TOXYQ

.BrianV. Breheay, Esq.

ChristinaE. Chalk,Esq.

:MamiL. Osherqff, Esq.

James A. Brigaghano, Bsq. March 2,2006

State and Spain. The offer to be made in the United Stat= (the W.S. Offer"') would be open to aII holders of Endesa Ordinary Shares who amnsiden~in the United States ('V.S.holders") and all hddm of Endm ADSs, regardlessoftheir residence. The offer tobemade in Spain (the "SoanishOffer'' and together with the U.S. Offer, the t~ffem'3would be open to aU holdm of Endesa Ordinary Shares, including U.S.holders of EndesaOrdinaryShares. Spanish regulations applicableto public takeover bids do not permit Gas Natural to excludeU,S, holders ofEndesa Ordinary Shares from the SpanishQffm. Thus, U.S. holders of Endesa Ordinary Shareswill be legally pdtted to participate ineither the U.S. Offer ar the Spanish Offer. The U,S. Offer is subject to, among other conditions, the condition that a minimumof 794,064,088 Endesa Ordinary Shares, representing75% of Endesa Ordinary Shm, including those underlyingEndesa IQDSs, are tendered inthe Offas [the "Minimum Tender Condition"), ad the mdifion that the Spanish Offer iscompleted. The Spanish Offer is subjectto the same aditions m the U.S.Offer; however, the Spanish Off& is not conditioned on the completion ofthe U.S. Offer. We are hereby requeshg:the following relieffrom the Commissibn in connection with Offers:
exemptiverelief fiom the pmvisiom of Rwb la-lO(a)(l) promulgatedmda the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), to permit GasNatural to make the Offersutilizing the dual offer struehue as describedinthisletter pursuant to which Gas Natural will make the U.S. Of€= available todlholders of Endesa ADSs, wherever located, and all holders of Endesa Ordinary Shares who are U.S. holders and will make the Spanish Offer available to all holders of Endesa Ordinary Sham (includingU.S. holders); exmptive relief bm the provisions of Rule 14e-5 under the Exchange Act.to. -allowGasNatural to purchase Endem Ordinary Shares pursuant to the Spanish. Offer after the public .announcement,but prior ta the expiration, of the U.S; Offer;. exemptive relief from the provisions ofSection 14(d)(S) of the Exchange Act to parnit Gas Natural to terminate withhwal rights at the expiration of the initial offeringperiod for Endesa Shares tendered into the U.S. Offer during that period; and exmptive x&efhm the .piovisionsof Rule 14d4(d)(2), under the Exchange Act topermit Gas Natured, fbllowingthe expiration ofthe U.S. Offer, to waive

Brian V.Breheny; Eiq.

ChristinaE. Chalk, Esq.

Mauri L. OsheroE Esq.

James A. Brigaghanq, Esq. -3-

orreduce the Minimum Tender Condition,In the event that the Minimum Tender Condition has not been satisfied,without extending the acceptance period or extendingwithhwal rights, inaccordance with the process prescribed by Spanishlaw and regdatiun. Please note that, as the Offers are being made on an wolidted basis, Gas Nahual has notbeen provided with access to nun-public idomation regarding Endesa. As such, the information provided in lhis letterwith respect to Endesa is based on informationcontained in Endesa's Annual Report on Form 20-F for the year endedDecember 3 I, 2004, filed on Jme 30, 2005 ("Endesa20-F"),Eadesa's Amendmat to itsAnnual Report onForm 20-FIA far the year ended Decmber 31,2004, Hedon October28,2005 ("Endesa20-FIK3, and Endesa's current reports on Form 6-K as well as on Endesa's public flingswith the ComisiSn Nacianal deI NPercado de Vdores in Spain(the "CNMV'j and other infomationpublicly disclosed by Endesa. Informationrelaw to Endesa has not been independently verifiedby GasNatural or its legal counsel. Backgrouud Information GasNatural is a Spanish limited liability companyprimarily focused on the supplyq distribution md sale of natural gas in Spain and Latin herica. Gas Natural ordinaty sharw nominal value El .00per share (Was Namd Ordinary Shes"), are listed on the Automated Quotation System of the four Spanish Stock Exchanges. Gas Nahrrd is a foreign private issuer as defined in Rule 3b-41c) undmthe Exchange Act and does not have any dass of sdties listed on a U.S. national secuitim exchange or registered under Section 72 of the Exchange Act. In connection with the U.S. Offer, Gas Natural intends to file a registration statement on Farm F4 (the "RedstrationStatement")withthe Commissionto register Gas NaM Ordinary Shares and Gas Natural American Depositary Shares, each representing one Gas Nahd Ordinary Share rGas Natural ADSsl'),to be issued in exchangefor the tendered Endesa Shares. In addition, in connection withthe U.S.Offer, Gas Natural has applied for the listing ofthe newlyissued Gas Natural ADSs on the New York Stock Exchange (the 'WSE). Endesa is.aSpanishlimited liability eompany which is the lzrgestdectricitycompany in Spaia Endesa Ordinary Shares are listed on the four Spadish stock Exchanges.and quoted on the AutomatedQuotation System of the Spanish Stock Exchanges. EndesaADS$ rue Iisted andtradedpn the NYS.E,and Endesa Ordinary Shares are listed theNYSE.notfor trading purposes, but only in connectionwith the registrationofthe Endesa ADSs, pursuant to the des

Brian V.Breheny, Esq.

Christina E, Chdk, Esq.

Mad L.Osheroff, Esq.

James A. Brigadiano, Esq. March 2,.2006

of &e NYSE. Endesa Ordinary Shares are also traded on the Santiago de Chile Offshore Stock

~xchan~e.' Weunderstand that Endesa is a foreign private issuer as defined in Rule 3b-4(c)

under the Exchange Act andthat the Endesa Ordinary Shares and Endesa ADSs me registered

under Section 12of the Exchange Act.

'QwlEcwtionfor-Ti& 11Rekf
In structuringthe Offers, Gas Natural is relying on Rule 14d-1(d) under the Exchange Act, which provides exemptive relief from otherwise applicable rulesto persons conductinga anexchangeoffm involving a non-U.S.company under certain conditions. Inorder for Gas Natural to qualify for exemptive relief under Rule 14d-l(d) ("Tier IIRelief"), among other conditions, U.S.holders must not hold more than 40% of the outsfanding Endesa Ordinary Shares, including Endesa ~~Shares represented by Endesa ADSs. Because Gas Natural isnot makingthe Offers pursuant to any agreement with Endesa, indeterminingthat the Offers qualified forTierII Relief, Ga Natural is presumingjas pedteed by Insfruction 3 to Rule 14d-l(d), that less than 40% of tbe Enclesa Ordinary Shares?including Endesa Ordinary Shares represented by Endesa ADSs, were held by U.S. holders based on the facts described below. According to the Endesa 20-Fand Endesa 20-F/A, as of December 3 1,2004, a total of 1,058,752,117 Endesa Ordinary Shares were issued.' In addition, accordingto the Endesa 20-F and Endesa 20-F/A, Endesa's capital stnck mounts to €1,270,502,540.40 andconsists of 1,058,752,117 fblly subscribed md paid shares bf €1.20 par value each, all of which are listed mthe four Spanish Stock Exchanges, and as of December 3 1,20011 and 2003,€28 million and €45 million, respectively, of these shareswere listed on the New York Stuck Exchange inthe form of ADSs. Thus, based onthe Endesa 20-Faad Endesa 20-F/A, it appears that approximately 2.20% of Endesa's shwe capital was represented by Endesa ADSs. In.addition, Endesa's website disdosesthat, as of December 3 1,2004, there were a total of27,609,284 Endesa ADSs outstanding,which rqresents approximately2.61%of the total number of outstanding Endesa Shares, and Endesa's 2005 Corporate Governance Report discloses that, as of December 31,2005,therewere 22,676,060 Endesa ADSs outstanding, which represents approximately 2.14% of the total number of outstanding Endesa Shares. ' Gas ~iatlrra.1isnot ma1ang.aseparate 03% for.Endesa inChile. OnDaember 7.,2005, the Chilean Stack EExChange ~o&sirm (~~erinrewdewia de Vdomy~iguros) confimed~inwriting to the CNMV that there is no obligationto make a tender offer in.Chile. The Eudeaa 20-F.@ ~ndesa@-F/A do.nqt.;specifythe numberof U.S. h01dts;of Endesa SbarPrs or the. percentage:ofEndemShes'heid by U.S.hoi&ix.

BrimV. Breheny; Bsq.
Christina E. Chalk, Esq.
Mauri L. Osheroff, Esq.
Jmes A. Brigagliano, Esq.
Based on data from Bloomberg, during the twelve-calendar-month periodended Janwry 19,2006,the worldwide aggregate trading volume of Endaa Ordinary Shares, including Endersa Ordinary Shares representedby Endesa ADSs, was 2,541,050,421 shamBased on data fiom Bloomberg, of such worldwide aggregate tradingvolume, 27,920,400 shares, or 1.lo%, were Endesa Ordinary Shares,including EndmaOrdinary Sham represented by Endesa ADSs, that were traded Onnational securitiesexchanges or on the OTCmarket in the United States. Althou& this data would 1eadtothe:apparent conclusion that U.S.holdas qmsent less than 2% ofEndma" share capital and trading volume, Endesa's website disclosesthat 15.3% of Endesa's capital stock is held inthe United States. In addition, Endesa's 2004 Annual Report, Operations Review, includes a chart of the "estimated shareholder structure of Endesa in April 2004 based on publicly available infomation." This chat indicates that 16% of Endma's capital stock is held in the United States. Therefore, based onthe publicly available informationdescribed above, Gas Natural ,hasreason to believe that, an of the date 30 days before the expected Commerrcement of the Offers, U.S.holders Md more than 10% ofthe 0~1WandmgEndesa Ordinary Shwa, including Endesa Ordinary Shares representedby Endesa ADSs, and, thus, Gas Natural does not believe that it is etigib1e for exemptiverelief under Rule 14d-1(c) (the 'TierI Relief"). However, bad on the publicly available infodon described above, Gas Natural believes that, as of the date 30 daysbefore the expectedcommencementof the Offers, U.S. holders held Iess tban 40% of the outstanding Endesa Ordinary Shares, includingEndesa Ordinary Sham represented by Endesa ADSs, and after reasonableinvestigation, Gas Natural has no knowledge and no reason to know that U.S. holders held more than 40% of We outstanding Endesa Ordinary Shares, including Endesa Ordinary Sharesrepresentedby Endesa ADSs, as of such date. Therefore, Gas Natural believes that, subject to its compliancewiththe other conditions contained in Rule 14d-1(d), it is eligiile for Tier IIRelief. Webelieve that this treatment is consistmi with the treatment ofother unsolicited exchangeoffers similarly structured. a, In tho Matter of O&r by SmoJi-Synthelabofor Ordinary Shares and ADSs ofAventis? Exchange Act File No.TP 04-30 (June 10,2004) (grantingcertain exmptiverelief in respect of an unsolicited tramactionwhere the bidder was unable to definitivelycanfirm that it qualified for Tier 11 Relief). Spanish Takeover Regulations and Offer Process In Spain, ihe main rule6.applicableto exchangeoffers for securities listed on a Spanish Stock Exchange are set forth in the Securities Market Act of 28 July 1988, asmended (Ley ale1 Mercado de Valares),and in the Royd Decree 1197/1991 of 26 July 1991,as amended,w public takeoverbids (Real Decreto sobre rkgimen de .lm ufertccrspaibZicas de adqarisicihz de

BrimV.Breheay, Esq.
Christina E.Chalk, Esq.
Mauri L. Oshmff,Esq.
James A. Briga@iano,Esq. March 2,2006 valores),which .aretogether referred to herein as the "Spanish Takeover Regulations,'"The main.body that controIs public ofYm in Spain is the CNMV. In Spain, befare an exchange oEkrmay be commend, the offer must be approvedby the CNMV. As noted above, the SpanishTakeoverRegulations do not permit an offwrto exclude myholdas of a class of securities in respect of which the offer ismade. The offermust be open to all holderg of such classof securities. Inorder to register the securities to be offwd and the offer thereof, m-appIicationand the offering prospectus describingthe offaand the securities to beoffered (the "S~mish promus"') must be filed with the CNMV. The Spanish prospectus must be written in Spanish and must contain, among other items, a description of the offeror and certain informationregarding the target company as well as any arrangements between the offmr and target company, the size of tbeoffer and min;mmacceptance condition, my other offa conditions, the considerationoff&, the plan for hancing the offer and the impact of such &mcing on&e target company,the procedure for acceptance of the offer, expense'spayable by the tar@ company" shareholdersinconnectionwith #hetransfer of shares, theofferor's business and activitiesand offeror's plans for the acquiredbusiness and proposed changes to fie target company's by-laws. TheCNMV will, in conjunctionwith the offeror and its advisers, review the Spanish prospectus rm a coddentid basis to ensure tlmf the terms of the offa conform to tothe applicable provisions of the Spanish Takeover Regulations and that the level of information disclosed in .the Spanish prospectus is adequate. Spanish counsel has advised that the review process with the CNMV eomunly involvesa preliminary meeting with representativesof the CNMV to discuss the CNMV's initial comments witb respect to the structure of the Spanish prospectus as well as any additianal infomation which the CNMVmay request to be added to the Spanish prospectus. This early review meeting is.folIowedby additional discussions and the submissionby the offeror of revised documentation incorporatingthe changesto the Spanish -prospectusdiscussed with theCNMV. Documentation and discussionswith the CNMV remain confidential throughout the entire review process until mmencement of the offer. Pursuant to the SpanishTakeoverRegulations,the CNMV has 15 business days brn the announcement of the offer to review the Spanishprospectus and approvethe offer, subject to the CNMV's abilityto request additional informationor clarificationand, to sucheffect, extend its review period. Spanish counsel has advised that, as is typical inlarge and complex transactions, the CNMV has extended the period to review the Spanishprospectus and the Spanish Offerand approvethe Spanish Offer. Spanish counsel has advised that the 'CNMV typicallyhas high degree.ofinvolvement in large and complextransactions, particularly in a situation in which an
offer is male in two or

Brian V.Breheny, Esq,

Christina E. Chdk,Esq.

Mauri L.OsherofF, Esq.

James A. BrigagIiano, Esq. March 2,2006

morejurisdictions. We understand that the CNMV has undertaken a detailedreview of the Spanis1prospectus. Spanish mumel has advised fiat the CNMV will focus on ensuring equivalent disclosure with respect to eachoffer document and spchrmkation ofthe closing mechanics (e-g.,acceptanceprodmes, publication ofresults and payment of consideration)in the U.S.ORmand the SpanishOffer. Thus, my revisions made to the prospectus ~latmgto the U.S. Offa included inRegistration Statement (the "U.S.prospectus''] will be submitted to the CNMV for its review. Based on such review, theCNMV will detmine what actions, if any,Gas Natural should undertake in Spainto mure fhe continued consistency of the disclosure in the U.3. prospectus and the Spanishprospedms. In addition, certain exhge offas,such asthe Offers, are subject to review by Spanish antitnrst regulators. The offeror is required to notie the Spauish Competition Defence Sewice (Sen4do de Defema de la Cornpetencia)(the "SDC") within five days of its submission of the offerto the CNMV. Within one month ofnotification to the SDC, the Spanish Ministry of Economy must decide whether to referthe transactionto the SpanishCompetitionAuthority (Bibunal de Defmsa de da Campetencia)("m)for a second stageinvestigation. If the trarrsaction is referred to the TDCfor a second stage investigation, the TDChas two months fiom the date of such referral in wbieh to issue a non-bindingreport. Once the Spanish Ministry of Econamy receives the TDCs report, it will submit the report to the Spanish Cotmdl of Ministers, which has a maximum period ofonern~nthin which to detemhe whether it will oppose thetransaction or whether it wilI subject thetransaction to certain conditions. If the Spanish Cauncil ofMinisters does not adopt adecision within onemonth of its receipt ofthe TDC report or within one month from fbe dateonwhich the initial two-month period for the TDCreview began, the transactionwill be deemed authorized. The SDC has finalized itsreview of the proposed transaction, and onNovember 7, 2005,the SpanishMinistry of Economy referred the proposed transaction for review by the TDC. On January 5,2006, the'TDCissueda nm-bindingreport with its conclusions with respect ta the effects of the Offers on competition inSpain. This non-bindingreport did not recornmend the Offas. The final decision of the Spanishantitrust authoritiawas rendered by the Spanish Council of Mhistm on February 3,2006. The Spanish Council of Ministers approved Gas Natural's acquisition of exclusive control of Endesa, subject to various conditionswhich include requirements for significant asset dispositions.3 Gas Natural currently expects that the CNMV will appmve the Spanish Offer on or about February 2'7,2096. End~ahas appealed the dccisiw of the SpanishCouncil ofMinista bo the Spanish Supreme Court This appeal ispefidhg.

Brian V. Brehetly9Esq.

Christina E. Chalk, Esq.

MauI.i L.Oshaoff; Esq.

James A. Brigagliano, Esq. March 2,2006

Offers involving campanies.that engage.inregulated activities in the energy industry, such sthe Offers,-musta140 be approved by the NationalEnergy Commission (Cornisith Nacio~uxlde la En~r~a) (the "m).On November 8,2005, the CNE approvedthe proposed transaction, subjWto certain coxiditionsrelating tb GasNatural's ongoing operatidm 'md investmentsand..a.requirmmtfor Gas Natural to divest certain.assets. Also, 0x1December 30,. 2005,the General Secretary ofEnergy, on behalf of the--Spashgovanmen\ communiczlted in .writingtoGasNatural its firmintention to waiveits "giilden share" in~ndesa." Once an offm has been cleared by the Spanishcompetition authoritim, the CNE (if applicable), the Spanish government(if applicablepursuant to the."goldmshare" reregime) and the CNMV, the ufferor must publish the terms of the off@in the Boletines de Cofizacidn(the "Listing Bulletins") ofthe Spanish Stock Exchanges onwhich the target company's shares are listed, inthe Spanish Mercantile Registry gazette and in two Spanishnewspapers. Within 10 days of the communicationof the CNMV's approval of the offer to the target, thedirectors of thetarget: companymust prepare and publish a report advising thetarget company's shareholderswhether to recommend or reject the offer. Pursuant ta the Spanish Takeover Regulations, an offermay remain open for acceptancesfor aminimum period of one month and amaximum periodof two months, However, pursuant to Spanish Takeover Regulations, inthe event that a competing offer has been filed with the CNMV,the acceptanceperiod for the ht offer shdI remain open and be automaticallyextendeduntil the expiration of the acceptanceperiod for such competing offer, even if such extension would result in the acceptanceperiod for the first offerbeing longer than two months. Pursuant to Spanish TakeoverRegulations, in the eventthat a competing offer involves solely cash consideration, such competingoffer mwt raminopen for acceptancesfor aperiod of onemonth, and inthe event that a competingoffer involves share considerationto be issued by the competing offeror, such competxng offer must remainopen for acceptancesfor aminimum periodofone month and Ml, to the extent necessary,be extended for a further 15- dayperiod from the holding of the General Shareholdas' Meeting to ,approvethe necessary capital increase to issue such share consideration. In either case, pursuant to Spanish Takeover Regulations, the first offer and the competing offmmust expire on the same date. Upon completionof the offers;the firstoffaor and the competingoffero~-~ sub~ect to satisfaction or waiver ofthe conditionsto therespectiveoffers,,arerequired to.purchase.all -sMsvalidly'tendered into their respective offers. Neither the fua.o-r nor the compehg A nmhr of previoysly state-owed Spaaish companies, incIu&g Eh,have "goldensham%" wbich permit h-Spanish gov&ment to limit the -acq~sitionof'hresabove certainthreshpi&,

Brian V. Breheny, Esq.
Christina E. -Chalk,Esq.

.MauriL..O&goff, Esq.

James A. Brigadiano, Esq, March 2,2006

offmr are pamitt4 to choose to purchase less than 100% ofthe shms tenderedbtheir respective offers. If a competing offer is announc,ed, the competing offerormust apply to the CNMV for authorizationof such competing offer and make myother required regulatoryfilings. On February 21,2006, B.6N AG, a corporation organized under the laws of the Federal Republic ofGermany rE.ON AG")),arid E,ON Zwolfte Verwaltungs GmbH, a wholly-awned subsidiary sf E.ON AG rE.ON IT'and, together with E.ON AG, 'TE.OW'),-sled a ScheduleTO with the Commissionand announced an all-cash tender offerto acquire 100% of the shw capital of Endesa (the "E.ON Offer"), Based on tbe relevant fact filed by E.UN 12 with the CNMV on February 21,2006,it appears that E.ON must take thefollowing actions:(i) obtain approval of the E.ON Offerby the CNMV,(ii) notie the European Commission of the concentration resultingfrom fhe E.ON Offer, (iii)noti@ the General Secretary of Energy with respect to the "golden share" in Endesa held by the Spanish government and (iv)make such filings and take suchactions as are required under U.S. laws and Chilean laws. Spanish counsel has advised that, at this time, it is unclear whether the E.ON Offer will require approval by the CNE. As noted above, E.ON must apply to the CNMV for authorization of a competing offer before it may commence the E.0N Offw. Pmant to SpanishTakeover Regulations, the CNMV has 15 business dap to review and approve a competing ofk, subject to the CNMV's ability to request additional infomation or ckficatian an& to such effect, extendits review period. Under Law 511995, of23 Mach, rm regulatio~sgoverning disposal of public shareholdingsincertain companies (Leyde rtgimenjuridic0 de ertajeraacidn depdc@aciones girblicas epl detemrimd~seqesas),the Gend Secretary of Energy1on behalf of the Spanish govmmt,has one month to review the applicationby E.ON for the Spanishgovernment to waive its "golden share" in Ende~a,subjectto the General Secretary of Energy's ability to extend this period for an additional 15-dayperiod. Inaddition, the General Secretary of Energy's review may be extendedpending the issuanceof any required report by the CNE and/or the resolution of the concentration issues by the European Commission. However, it is also possible that the General Secretary of Energy may decide not to open thereview period and waive, onbehalf ofthe Spanish govment, its "goldenshare." Sincethe E.ON Off involves solely cash consideration,the E.ON Offer may only remain op for acceptancesfor one month. Upon wmmencement of the E.ON Wer, the accqtanceperiod for Gas Natural's Offers would be modified to end on the same date as the expiration date of the E.ON Offer.Upon approval of *e E.ON Offer, the GNMV would issue a press release to be made available on its website amounting the approval ofthe E.ON Wer and the automatic extension of the expiratian dateofGas Natural's Qh. Inthis event, Gas Natwal would file with the Commissionand disseminatea
prospectus supplementdisclosing the modified expiration date of theU.S. Offa.

Brim V.Breheny, .Esq.

Christina E. Chalk,Esq.

Mauri L. Osheroff, Esq.

Jmcs A. Brigagliano, Esq.. March 2, ,2006

Followingthe mmmencement of an offer, the Spanish Takeover Regulationspermit an offeror to modify the terms ofita offer at any time prior to the last sevenbusiness days of the acceptanceperiod, hut only ifsuch modification entailsmore favorable treatment for the target shareholders (e.g.,improvement of the offer consideration). Any modifications to an offer must be movedby the CNMV. However, in the event that a competing offer has been commenced, hlIowing commencement of tbe competingoffer, the &t offeror may elect, but is not obligated, to withdraw its offer or improvethe terms of its offer. Pursuant to Spanish Takeover Regulations, the first offor may withdraw its offer until seven business days prior to the expirationof the acceptanceperiod. Alternatively, the first offeror may improve the terms of its offerby submitting suchproposed revised terms in a sealed mvelope to the CNMV on the fifkh trading day following commencmmt ofthe competingoffer. Pursuant to Spanish Takeover Regulations, the amiderationoffered pursuant to the improved terms ofthe first offer proposed by the first offerormusk be greater thanthe vdue of the consideration offered by the competingofferor, and the improved terms of the first offermay not include a higher minimum fender conditionthan the competing offa. Inaddition,if the considerationbeing offeredby the oEmn is not the same (e-g.,ash consideration compared to share camideration),the first offaor must submit an independent expert's report evidencingthat the improved tms of the first offi include considerationthat is greater than the value of the considerationoffered in the competing offer. Following the commencementof tbe competing offer, the competingoffar may, but is not obligated to, improve theterms ofits offer by submitting suchproposed improved tams in a sded envelopeto the CNMV also on the fifth trading day following commencement of the competing offer. No later than the trading day followingthe submission ofimproved terms by the hstoffaor and the competingoffercn-,as applicable, the CNMV will notify both offerors midmake a public announcement of the improved terms proposed by the offerors. Within two tradingdays following the date of such annowcement, each offeros is required to provide the CNMV with evidence of a supplementary guaranteerequired to support any increase in thie cash portion of fie consideration offered pwuant to sueh improved terms. Thaeafter, the CNMV will notify each offeror of its approval of the improved tenns of the offers, and the applicableoffkrofls) wiIl be required topublish the improved tei.msin two Spanishnewspapers, the Listing Bulletins and the Spanish MercantileRegistry Gazette. Inthe event that improvd terms of the Offers were approvedby the W,Gas Natural would file with the Commission ad disseminate a prospectus supplement describingthe improved tms of the U.S.Offer on the date that such improved terms are published in Spaia. In addition, a supplement to the Spanish prospectus
would be made availablein Spainonthe date immediately following publication of the improved tms.

Brian.V.Breheny, Esq.
Christina E. Chalk, Esq.
Mauri L.Osheroff, Esq,
James A. Brigadiann, Esq.
The acceptanceperiod for the competing offer and the first offer must extend at least ttmugh the 1 calendar day followingpublication ofthe improved o&rtams, em if such period would rdt mthe acceptanceperiod far the competing offer and the first offa being longer than onemonth from the commm~entof the compeling offer. However, if the considmationoffered pursuant to the improved terms ofthe -first ofFm or the competrng offer consists,in whole orinpart, of securities of the applicable offeror, then the aeceptanceperiod for both the fxst offer and the competingoffm shall be extended a further 15 calendar day period from the holding of the general shareho1dersYmeeting of such offeror at which the necessary capital increaseis approved. The Spanish Takewa Regulations do not generally provide for withdrawal rights. However5an acceptance maybe revoked in the event that prior to (but not on or after) expiration of an offa(i) a competingoffa is appr~ved,(ii) the offeror changes the tams ofits offerwith the prior approval af the CNW followingthe deliveryofsuchacceptance or (Eiii) the offeror waives a conditionof the offer wEch requires the passing of a resolutionby the shareholdersofthe target campany. Under SpanishTakeover Regulations, in the event that a competing offer has been &mn~rnc@ any acceptances of the htoffermadeprior to the comxnen-ent of sueh competing offermay be revoked at any time until .theexpiration of the offers. In the event that the ht offerormuor the competing offeror submitsimproved tams ta the CNMVrany acceptances of the first offer or the competingoffer made prior to the publication of any improved terms of the btoffexandlor the competing offer maybe revoked at my time until the expiration of the offers. However, no withdrawals of my shares tendered after the publication of the improved tams of the offa andlor the competing offer me permitted under Spanish law. Spanishdepositwies areheld responsible for the delivery of shares tendered into an o* on behalf of their clients and,thus, couldbe held liable far any trausfer of shares which havebeen tendered into an offer, unless and mtil suchtendered sham are either accepted for payment and paid by the bidder, the offer is withdrawn and suchtendered shares are ~eturnedto the tendering shareholders,or mcepbces are revoked in the permissiblecircumstances described in he foregoingparagraph and suchtendered shares are retuned to fhe tendering sheholders. Following the expiration ofan offa,all Spanish depositariesholding target mmpany sharesreport the number oftadered shares to the exchange agent and the Governing Bods of the Madrid, Barcelona, Bilbao and Valencia StockExchanges (SociedrsdesRectoras de Bolscrs de VialoresdeMadrid, Barcelonu, BiEbao y Valencia,or the "GoverninaBoards''). With respect to book-entry shares, the Spanish depositaries must irrevocablytender, with an inevocableorder to transf~~the target company shares to the Spmish exchmge agent by submitting electronic files with
data correspding to tbetendered shares to be included in the

Brian V.Breheny, Esq.
Christina E. Chalk>Esq.
Mauri L. OsheroE, Esq.
Jarnes A. Brigagliam, Esq. centralized counting and reporting system in Spain. Typically,the OoveraingBoards of the Spanish StockExchangesthen report these multsto the CNMV *thin five business days aRer the expiration of the offerperiod. Under Spanish Takeover Regulations applicableto exchange offers, the offa-oris permitted to adjust c& aspeas of the settlement procedures, subject to approval of the CW. In order to streamlinethe process for determining-theresults of the Offers, the Spanishprospectus contemplatesthat (1) Spanish depositaries will repart the number oftendered Endesa Shares to the Spanish exchange,agentonly and (ii) the Spanish exchange agent, rather than the Governing Baards of the Spanish Stock Exchanga, will report the results of the Offers dkctly to the CNMV. The CNMV is responsible for determiningthetotal number of target company sharestendered into the offer and announcingwhether the mnditiomto the offer have been fulfilled as of the timeof the expiration of the offer period. The CNMV is required to report its determinationto the Governing Boards ofthe Spanish StockExchangeswithin three business days after receiving their reports and announce the defidtive results of the offer. Typically, the CNMV provides suchdeterminationmd mikes such anno~~ent within onebusiness day sfreceiving the repom of the Governing Boards of the Spanish Stock Exchanges or the exchange agent, as the case may be. The Gavming Boards of theSpanish Stuck Exchanges must then publish, witbin onebusiness day afterreceiving the CNMV's determination, the definitiveresults ofthe offer intheir respective Listing Bulletins. Pallowing the amomcement of the definitiveresults of an offm, Ibaclear:
the institution which managesthe. Spanish clearance and settlement system ofthe Spanish Stock Exchanges and maintains the wntd share registry for all listed companiesin Spain f"Xbercleaf'),will block dltarget companyshares tendered in the offer and issue ablocking certificateto the bidder which certifies that thetendered shams have been blacked pending settlement of the offer by the bidder. Under Spanish Takeover Regulations, in the event that the minimum tender condition in anoffer is not satisfied,thebidder must determine whether to waive such condition or withdraw the offer during the course of the settlement phase following exphtiun of fhe offer. Pursuant to Spanishpractice, such determination of whether to waive or withdraw is made within five business days afterthe expiration of the offer. Pumuantto Spmishpractice, in the event that the minimum tender conditionis not satisfied, the CNMV will confidentidlyinform the bidder of the total number of shares which have been tendad in the offer and, based on this report, the bidder will confidentiallyinform the CNMV whether it will waive the minimum tender conditionor withdraw the offer. These confidentialdiscussionsbetween the bidder and the CNMV occur after expiration of the offer period and prior to the muncernent of the " Ibmlear isthe c,~mmeroialname ;forSociedatde Gw~ibn$e IDS Sistm de R@w, Coqpmeidn y Liqui~mhhd<Ydom,SA.

Brian Y. Breheny?Esq.
Christina E. ChaIk, Esq.
Mauri L. Oshemff, Esq.
JamesA. Brigagliano,Esq. results of theoffw by the CNMV. Thus=at the time that the C W announcesthe:dehitive resultsof the offer, it also mounoes whetb dl oonditimsto the offer have beeo satisfid.and, if applicable,whether the bidder.hwaived the minimum tder condition w elected ta withdraw the offer. Pun~a~lf to the.proposed terms ofthe Offas, Ga is offering to exchange; far each Endesa Ordinary.Share.vdidlytendered .mdnot withdrawn, €7.34 in cash plus 0.569 newlyisd Gas NahxFaI:Ordinary Shares or, solelyin the U.S. OIPEer,.'GasNatural ADSs; and far-eachEndlsa ADSs validly tendered andnot withdrawn, €7.34-in cash plus 0.5@ newly imad GasNahvaI Ordinary Shares oq 601ely in the U.S.Offer,. GasNatural ADSs. Holders who tender Endesa ADSs in the U.S. Offer dU.S. holders who tender Endesa Ordinary Shares io the U.S. Offer will receive the U.S. dollar equivalent, net of expenses,ofthe cash considerationpayable in respezt of such tendered Endesa ADSs orEndesa Ordiapuy Shares, as the case may be. The only expensesthat will be deducted hm the cash considerationto be paid in the U.S. Offer consist of the charges that wilI be incurred by the U.S.exchange agent in converting such cash consideration hm euros to U.S. dollars. Holders who tender Endesa Or- Shms in the Spanish Offer will receive the cash consideration payable in respect of such tendered Eadesa Ordinay Shares inms. No fractional GasNNatal Ch4na-yShares or fiactiunal GasNatural ADSs will be issued in connectionwith the Offers. T~Ilieu of any fiactionral GasNahrral Ordinary Share that a tendering holder of Endesa Shares would have otherwisebeen entitled to receivein the U.S. Ofkr, such tendering holder will receive an amount incashequal to the product of that fraction and the average sale price per Gas Natrlral Ordinary Share, net ofeirpmses, realized onthe Automated Quotatiob System in Spain in the sale by the U.S. exchange ageot ofall the aggregated fractional Gas Natural Ordinary Sharesthat would have otherwisebeen issued. In lieu ofanyfractional Gas Natural ADS that a tendering holder ofEndesa Shms would have otherwise beenentitled to receive inthe U.S. Offer, suchtendering holder will receive an amo~l~lt in U.S.dollars equal to the product of that fraction and the average sale price per Gas Natural ADS,net of expenses, realized on theNew York Stock Ex~hangein the saleby the U.S. exchange agent ofall the aggregated fiactiod Gas Natural ADSs fhnt would have

Brian V.Breheny, Esq.

Christina E. ChaIk, Esq.

Mawi L. Osheroff, Esq.

JmesA. BrigagIiano, Esq. -1 4- March 2,2006

ofherwi~ebeen issued. The sale ofthe aggregatedfractional Gas Natural ADSs on the New York Stack Exchangewill crcxur within appmximateIy20trading days followingthe dxpiration -oftheOffers. Similarly, if a holder of Endesa Qrdinary Shares tenders ,an"odd lot" of Endesa Ordinary Sharesinthe Spanish Offer tbatwould othewise result inthe issuanceofa fractional Gas Natural Share, such holder will receive a cash payment in lieu ofsuch odd lot of Endesa Ordinary Shares. Inaccordance with customarypracticein Spain, Gas Natural has appointed an odd lot agentto purdhax, for cash, all add lots of Endesa Ordinary Shares tendered in the Spanish Offer. Theodd Iot agent will acquire such add lots of Endesa Ordinary Shares for an mount ineuros equal to the sum of(i) the odd lot multiplied by €7.34 (the cash masideration per Endma Shm) plus [ii) the odd lot multipliedby 0.569 (the numb= of GasNatural Ordinary Shares issuable in exchange for every one Endesa Shm) and ?henmultiplied by X, with "X'being the aritbroetical meanof the openingprices of theGas NaW Ordinary Shares on (x) the datethe results ofthe Offm are published, (y) the date immediately before such date and (z) the date immediatelyfallowing such date. Thepurchase by theodd lot agent of alI of the odd latsofEndesa Ordinary Sharestendered in the Spanish Offer will omswithin approximately2Qtrading days followingthe expiration of the Offers. Proposed TransactionStructure Gas.NahJralproposes to.structutethe.Offers:as followk

On September 5,2005 (the "houncement Daie93,after &e closing ofthe
markets in Spin, Gas Natural issued, arnarzg other notifications, apress releage announcing its intention tomake the Offers (he "AnaOuncm~ent")and filed a relevant fact with the CNMV informing of the filing of the Spanish prospectus and request for authorizationin respect of the Spanish Offer (the 'RelevantFact"), each ofwhich described the proposed material terms thereof. Each of these documentswas filed with the Commission on September 6,2005(as a result of the Labor Day holiday on September 5,2005) pursuant to Rule 425 promulgatedunder the Securities Act of 1933, as amended (the "Securities Act"). The Qffmwill have the following characteristics:
The U.S.Off will be anoffaby GasNahid to -exchangeGas Natural ADSs (or Gas Natural Minary Shares) and cash (in U.S. dollars) for any and all Endesa ADSa and to exchange Gas Natural Ordinary Shares (or GasNatural ADSs) and cash (inU.S. do1Iars) for my and all Endesa Ordinary Shares tendered by U.S. holders. Endesa ADSs may only be tendered inthe US.Offer.

Brim V.Breheny, Esq.
Christina E. CJx& Esq.
Mad L. Osberoff, Esq.
James A. Brigagliano,,Esq. -15-
TheSpanish Offer will be an offer by GasNatural to exchange!GasNatural Ordinary Share8 and cash (in ems) for my and all Endesa Ordinary Shares held by my persons, regardlessofjurisdiction. AS noted above, we have been advised by Spanish counsel that, pursuantto the Spanish Takeover Regulations, Gas Natural is required to make the Spanish Offer open .to dl holders of Endesa Ordinary Shares, including any U.S. holders of Endesa Ordmmy Shes. Therefore, U.S. holders ofEndesa Ordinary Shares will be legally permitted to participatein eitha the U.S. Offer or the Spanish Offer (but not both Offas with respect to thesameEndesa Ordinary Shes).

GasNatural will offer to tendering holders of Endesa Shares the same number of
Gas Natural Ordinary Shares (or, solelyinthe U.S. Qffer,G~agNatural ADSs) and the same amount of cashper Endesa Ordinary Share tendered in either the U.5. Offer or the Spanish Offer, except that the cashconsidemtionin the Spanish Offer will be paid in ewos, and will otherwiseassure that holders are treated equally. Inaddition, the other material terms and conditions of the U.S. Offer and the Spanish offer will be the same inall material respects, except as describedherein. HoIdm ofEndesa Ordinary Shares or Endesa ADSs tendering inthe U.S. Offer will have:,thewithdrawal rights.requiredunder,UnitedStates Imisab~ectta the grantingof the exemptiverelief soughtin this letter. Holders of Endesa 'OrdinaryShe8 tendering.in the Spanish Offer will not have any withdrawal rights, except inthe ev.entthat .acompeting,offer is .qprovedby the CNMV, the CNMV approves changes to the terms: ofthe Offersor the offeror waiva a conditionrel'atatingto the passing of aresolution by the Endssa shareholders. Both tbe'spanishOffer.and the U.S. Offmwill have the same offer period, which, in any event, would..notbe less than.20busitless days. Although the offerperiods for the U.S. Offer and theSpanish O&r will initially be the smne, it ispossiblethat the offer period for the Spanish Offermay prior to the expiration of the offer period for the U.S. Offer due to requirements.of applicable law! UnderSpanish law, the hqmacceptance modthat GasNatuPal my propose is months, subject to certainexceptions. Under U.S. law, inthe event that GasNatural makes ceaainchangesto the tmm of the U.S. Offer, Gas Natural may berequired to distribute additional offew maw and extd the offerperiod for the U.S,Offer beyond the expiration ofthe &r pe~odfor the Spanish Offer. 6

BrimY. Breheny*Esq.

ChrisfinaE. Chalk, Esq:

'Mami L.&heroff, Esq.

James A. Bigagliaim, Esq. March 2,2006

On and after the dnnouncemmt Date, Gas Natural fled cunfidentially with the
CNKV and ather appropriate SpanishreguIatory authoritiesthe documents required by Spanish law and a Spanish prospectus relating to the Spanish Offer. Inaddition, as noted above, Gas Natural filed with the CoMmiSsion the press releasewith respect to the Announcement md the Relevant Fact aswell as certainotherpublic communica~onsmade with respect to the Offers under Rule 425 promulgatd under the Securities At.
OnDecember 2,2005, Gas Natural submitted the dr& Registration Statement
for contidentid review by the Staff Inresponseto the Staffs comments, on January 17,2006, GasNahd submitted a mvised draft ofthe RegistrationSlateanent for confidentialreview by the Staff. ThereaRerJin responseto additional caments from the Staff,on February 13,2006, Gas Natural submiteed n third draR of the Registration Statement for confidential review by the staff.
Tbe Spanish Offermay not be cummenceduntil the CNMV has reviewed the
Spanishprospectus and approved the Spanish Offer. In addition bthe CNMV approval, the Spanish Offer may not be commmceduntil the Spanish antitrust authorities,the Spanish govemmmt and the CNE appmve the proposed tramaction. OnNovember 8,2005, the CNE approvedthe proposed transaction, subject to cahiu conditionsrelating to Gas Natural's ongoingoptions and investments and arequirement for Gas Natural to dispose ofcertain assets in connedion with thetransaction. On February 3,2006,the Spanish Council of Ministers approved Gas Nattrsal's acquisition of exclusive control ofEadesa subject to various conditionswhich includerequirements fox significant asset dispositions,which decision is subject to apmtling appeal by Endesa. Gas Natwal currently expects that the CNMV wiU approve the Spariish Offer on Feb-ruary 16,2006.
After Gas Natural has obtained the approval of'the CNMV, Gas::Natr~raIis

required to causethe Spanish Offer to be c.ommencedin accordance with Spanish law .and, -assumingthe Commissionhas declared.the effectiveness of the Registration Statement, will cause-the U.S. Offer to be.commenced:h:acco&mce with United States 1aw.ddl file with .theCommission a ScheduleTOrelatingto the U.S.Offer,.in each case, on the.samedaie (the ''Commencement Date7').
6. Pmmptly after the Commenment Date, GasNatural will disseminate the U.S.
prospectus inaccordance with United Stateslaw ad will make available the offering documents relating to the Spanish Offer outside the United States in accordancewith Spanish law. The Spanish prospectus and the annexes thereto will be publicly available only in Spanish. The Spanish prospectus (excludingannexes) win be publicly available on the websites of GasNatwal, Endm and the W,and free copia ofthe Spanish grosperctm (including:annexes) will be publicly availableat the registered addresses of the Spanish Stock

'BrianV. Breheny, Esq.

Christina E. Chalk, Esq.

'Mami L.Qsheroff,Esq.

James A. BTigagliano, Esq. -17-

Tbchange authorities,the Spanish exchange agent in the Spanish Offer, Gas Natural, Endesa:
and the CNMV. The Spanish prospectuswill not be publicIy availablb:.inEndish and will nbt be mailed intothe United States or otbmvise disseminated&the United S-. by or onbehalf of Qas Na-. except'..@. in order tocomply with Spanish law,,GasNatural is required to send the Spanish prospectustoxaeh stockexchange on which Endesa Shares are.listed, includingthe New Yark Stock Exchange.
7. HuIdas of certificated Endesa ADSs may tender their Endesa ADSs into the
U.S. Offer by delivering such Endma ADSs to the U.S.exchange agent, together with a validly cownpletd letter oftransmittal. HoIders of Endesa ADSs in book-entry fbm may tender their Endesa ADSs into the U.S. Offer by instructing their broker or otber Wcid intermediary through which their Endesa ADSs me held to make book-entry delivery of suchEndesa ADSs into an accountmaintained by the U.S. exchange agent with TheDepositary Trust Company. U.S. holders of Endesa Ordinmy Shares (all of which are uncertificated) must complete and send the U.S. farm of acceptance to the U.S. exchange agent. and instruct the custodian in whose name suchEndesa Ordinary Shares are registered to deliver such Endesa Ordinary Shares to an account maintained by the U.S. exchange agent with its custodianbank in Spain (the "Custodian").
8. Inthe wmt that E.O.Ncummenes the E.ON Offa(orany other competing
offeris commenced following the comme3nmat of the Offers by Gas Natural), the expiration date of the Offers would be modified to be the same date as the expiration of the E.ON Offer or other cornpetbgoffer. GasNatural would file withthe Commission md disseminate a prospectus supplement disclosing the modifiedexpiration date af the U.S. Offer. In the event that Gas Nahal decides to improve the terms of the Offers fallowingthe commencement of the E.ON Offer or another conapeting offer, Gas Natural would szibmit itsproposed improved terms in a seaIed envelope to the CNMV on the fifthWingday following mmmencementof such 0thoffer. Upon approval of such improved tams by the CNMV, Gas Natural would file with the Commission and disseminatea prospectus supplement describing the improved terms of the U,S. Offer on the date that suchimprovd terms are published in Spain. In the eventthat Gas Natural decides to withdraw the Offers following tbecammen-ent ofthe EON Offer or another competingoffer,Gas Nattrral would inform the CNMV inwriting and issue a press release announcing the withdrawal of the Offers*fde su& p s release with the Commission and take all other steps requid under applicable U.S. and Spanish laws to withdraw the Offers.
9. Upon the expirtttion ofthe Offers, the Custodian will report to the Spanish
exchange agentthe number ofEndesa Ordinary Shes tendered into the U,S. Oflm and held in the U.S. exchange agent's account with the Custodian, and the U.S.exchange agent wilI report to the Spanish exchange agent the number of Endesa ADSs tendered into the U.S.Offer, In

Brian V. Breheny, Esq.

Christina E.Chalkj Esq.

Mz& L.Osheroff, Esq.

Jmes A. Brigaglimo, Esq. March 2,2006

addition, following expiration ofthe Offas, the U.S. exchange agent will request the depositary

bank holdingthe Endesa Ordinary Shares underlyingthe tendered Endesa ADSs (the

"Depositrmry")to cancel all tendered Endesa ADSs and deliver hdesa Ordinmy Shares

underlying such canceled Endesa ADSs to the.account maintaitled by the U.S. exchange agent

with the Custodian. As nDted above, the Spanishprospectus contemplatesthat the Spanish

exchange agent, rafher the Spanish StockExchanges, will be responsible for receiving snd

amgating all reports of tendd Endesa Shares (including those tmdered in the U.S. Offer).

10. I?ollowingthe expirationof the Offers, the various Spanish depositaries
(including the Custdiaa)holding Endesa Ordinary Shares will report the number oftendered Endesa Ordinary Shares to the Spanish exchange apt and will irrevocably tender, with an vocable order to tramfer, such tendered Endesa Ordjnary Shares to the Spanish exchan~ agent to be included inthe centralized counting and reporting system in Spain. Within five business days of the expiration date of the Offers, the Spanish exchange agent must report the total numbers of Endesa Shares tendmed in the Offers to the CNMV. The Spanishexchange agent will confidentiallyinhnn the CNNIV and GasNatural of the total number of tendered Endesa Shares, and,if the Minim~~~n Tender Condition has not been satisfied, Gas Natural will con- in writing to the CNMV whether it will waive the Minimum Tender Condition or withdraw theOffers. 1 1. Follhng (;onfirmationby Gas Natural with respect to the Minimum Tender Condition, if applicable, and,inany went,within three business days after receipt ofthe report hm the Spanish exchadge agent, the CNhNwilI ummunicate the dehitive results of the Offers to the GoverningBoards of the Spanish Stock Exchanges mdannourn wch definitive results its well as, if applicable,any waiver of the Minimum Tender Condition by Gas Natural or an electionby Gas Natural to withdraw the Offers. Cfas Natural is 'bound by the definitive results announced by the CW. Within om business day thereafter, the GoverningBod of the Spanish StockExchanges will publish the definitiveresults of the Offers intheir respective Listing Bulletins.
12. Following the.mouncementby the CNW,,Iberclearwill block all Endesa
Shares tendered in the Offers and issue a blocking certificateto GasNatural which certifies that. the tendered Endesa Sharesh.avebem blocked pend'ig.settlemd ofthe Offers.
13. Settlement in respect of the Spanish Offer and the U.S. Offer win ocau as soon
as practicable md, inany event, within spproximately 15 business days following expiration of the Offers. Aithau& we intend to make the settlement dates for 'theU.S. Offer and the Spanish Qffathe same, inthe went tbatthe offer pmiod for the U.S.Offer is extendedbeyond the expiration of the offer period for the Spanish Offer due to requirements of applicable law, as described above, dement ofthe U.S. Offer may occur after settlement of the Spanish Offer.

Brian V.Breheny, Esq.
Christina E. Chalk, Esq.
.Mad L.Osheroff,Esq.
Jmes A. Bri~agliano,Esq.
Except to the extent of any exemptive reIief .gmtedpursuant to this letter,the U.S. Offer is structured so .asto comply with .allprovisions of the.Exchange.A&and the Sdties. Act and the rulesand reMatiom promulgated thereunder, and the Spanish Offer will be conducted pursuant to and in accordancewith all applicable Spauish laws and regulations. Rule 14d-101a11.11Issues In October 1999,the Commission adopted certain exemptiverules for wss-border offerings, including exchangeoffers, relatingto the secwities of foreign companies. The promulgatingrelease welease Nos. 33-7759,3442054, htemfltional Series Release No.1208) (fhe"Cross Border Release") indicates that the purpose of grantingexemptionsto Rule 14d-10 is to facilitateU.S. investorparticipation inthese types of transactions. Rule 14d-1O(a)(l) provides fhat noperson maymake a tender offer unlerrs the offeris open to all security holders of the class of seaxities subject to thetender offer. Rule 14d-1(d)(2)(ii) providesexempfive relief hm thisprovision and allows a bidder that qdfies for Tier I1 Relief to separate its offerinto two offers:one made mly to U.S. holdm and anofha affa made only to non-U.S. holders, Tt is a condition of tbisrelief that the offer to U.S. holders must be made on the terms at least as favorableas those offered to any other holder of the same class of securities htit is fhe subject ofthe tender offer. The U.S. Offer is being made on tams at least as favorable as the terms on which the Spanish Offer is being made. A literal application of Rule 14d-l(d)(2)(ii)would not exempt fhe dual offer structure described inthisletter. As noted above, the U.S. Off ishe@ made to all hoIders of Endesa ADS@,wherever located, not only U.S. holders of Endesa ADS%and the Spanish Offer is being made to all holders of Endesa Ordinmy Shares, includingU.S. holders of Endesa Ordinay Shares. Inaddition, there are sevad potential points of conflict between the exchange offer rules and practices in the United States and Spain. Wehave been advised by Spanish counsel that an exchange offer for equity securities ofa Spanish company registered with the WMV must camply with certaindisclosure, dissemiaation, thing and other conditions that differin some respects from U.S. rules and repktions. For example, (i) the CNMV must approve the terms of the exchange offer prior to its wmencement, (ii) the exchange offer may not commenceuntil after the applicable antitrust and other regulatorysrpprovals with respect to the transactionhave been obtained: (iii) tbe fiering documents, although substantially similar to those required under U.S. law,,me presented in a format that diff'ers om Form F-4 and ' Spanish comwl has advised that, incemincases, an exchangeoffer in Spainmaybe commenced without prior approvalafSpanish antitrust authoritiesifa derogationisgranted by the SpanishMinktry ofEconomy when referr& the tmmctiato the TDC. Nosuch derogationhasbeengrantedwith respect to tbe Wers.

Brian V. Breheny, Esq.

Christina E. Chalk, Esq.

Mawi L. ~sheroffiEsq.

James A..Brigagliano,,Esq. -20- March 2,2006

ScheduleTOand are required to be so presented in Spanish, (iv) the offering period in Spain is required to be at least one month and maynot extend longer than twomonths, (v) -the exchange offer must be made to all holders of a particular classof sdties (including U.S. holders), and (vi) withdrawal rights are not generallyprovided to tenderingholders, other than in the limited circunvtances describedherein. Gas Natural believes that the best method for reconcilingthese potential confiictsis a dual offa structureon the terms described herein. The Commissionhas granted exemptive relief to permit dual offer structures in a number of prior orders. In the Matter ofAmwsham IfitemadiomlPLC,Exchange Act Release No. 34-38797 (July 1, 1997), the Commission concludedthat, inview of the existenceof conflicting regulatory schemesand tender offer practices and the fact that United States holders ad non-United States holders would be permitted to participateintender offers on an equal basis, it was appropriateto dIaw a tender offer tobe structured as two concurrent offers-one in the United States and one inthe foreignjurisdiction. Based onthis conclusion,the Commissiongranted an exemption from Rule 14-10 and acknowledgedthat dusl offerscould be conducted without having the foreign offer subject to Section 14(d) ofthe Exchange Act and the rules thereunder. The Commissionhas granted similarreliefin connectionwith cross border tender of&s for tbe securities offoreign companies in which the law of organization of the subject company prohibited the bidder from excludingU,S.holderrs in the offermade in the locaI jurisdiction. See, e.a,In the Matter ofBanco Bilbao VizcayaArgentatiu, Sd.for Setie5 B Shares and American Depositary Shares of Grupa Finamiero BBYA Bancorner, S.A. de C,YI , Exchange Act File No. TP 04-26(February 2,2004); In the Matter of Tender qffir by Fintech Mubile Inc.fir GrupoImacell, SA. de C.K,Exchange Act File No.TP 03-7 95 (July 23,2003) (Mexico);In the Matter of Tender Ofer by Movil Access, S.A. de C.Y.for Gmplmcell, SA. de C.Y,Exchange Act FiJeNo. TP 03-93 (June 24,2003) (Mexico);In the M@er ofne Pep8i Bottling Group, Ina, Battling GroupUCandPBG Gmpo Embotellador Hispano-Mmmcrano 8.L3 Tetrd~rO$rsfor Shires, CPOs and GDSs of Pepsi-Gemex. S.A. de C. %, Exchange Act File No.02-93 (October 14,2002) Mexico);In the Matter ofSouthem Cross'Pwtial Ofleerfor Shrm andADS, of Telex-ChileS.A., Exchange Act FileNo. TP 02-30(March 5,2002) (Chile);In the Matter ofl7me A~SCoporation Tender Ofleerfur Shares and ADSs of Cbmpaiiia Ancjmima Naciortal Teldfenas de Venezareb (w,Exchange A& File No. TP 01-239 (October 22,2001) (YenezueIa);ln the Matter of Ivm Cop 's Sewnd Step Tender merfar An Shares andADSs of Laboratorio Chik S.A., Exchange Act File No.TP 01-215 (August 3,
2001) (Chile);In the Matter of Ivax Corp. 's TenderO$ePfor Shares and ADSS ofLaboratorto
Chile S.A.,Exchange Act File Na. TP 01-136 (June 5,2001) (Chile);In the Mutter ofExchange men by Telefinica S.A.for TeIeco~~aunI'cac6ade So Paulo S.A., TeleSudeste Celular

Brian'V.Breheny, Esq.

Christina E. Chalk, Esq.

Mauri L.Osheroff, Esq.

James A. Brigaglimo, Esq. March 2,200;6

Participacies S.A..,Tklefdnfctzde Argentina S.A. and''Tefef;dnica..:&lPed, SA.A.,,Exchange Act File No. TP0043 (he5,2000) (Brazil and Peru). Inparticular,we wish to draw the SWs attention tothe exemptive relief under Rule 14d-10 grantedby the Commission with respect to a dual exchange offer made in the United States and Peru WJRthe Matt* of Exchange Offers by Telefbnica S.A.fop. Telecornsuzicat$ies de Sdo Pado Xd., TeEeSdeste Celdnr Participaq6'ss S.A., T~lef6nicade Argentina S.A. and TeEefdmica del Peh, S.A.A.?supra. The Telefdnica case arose in an almost identical context to the Offers described in this letterbecause Peruvian law,like Spauish law, did not pbt thebidder to exclude U.S.holders hm the Peruvian offerand did not generally allow for the withdrawal of tendered securities, Similarly, under the SpanishTakeover Reguldona, Gas Natural isnot permitted to exclude U.S. hoIders of End- Ordinary Shares from the Spanish Offa and aholder ofEndesa Or- Shases tendering into the Spanish Offerwill not generally be entitled to withdrawal rights unlws (i) a competingoffer is approved by the CNMV, (ii) Ga Natural changes the terms of the Spanish Ofk(with the prior appmval of the CNvfV) following deliveryofan acceptanceby suchholder or (iii) GasNakual waives a condition of the Spanish Offerwhich requires the passing of a resolution by the Endesa shareholders. Spanishcourtsel has advisedus that Spanishtakeoverregdations require that any change to the terms of the Offers followingcommencement thereof must entail %ore favorable treatment" to the holders of Endesa Sham (e.g., improving the offer considerationor removing conditions b the cornpiction ofthe offer). Spzlnisb wunsel has fu.rt.h.eradvised w that it is not possible for Gas Natural to introduce changesto the Spanish Offer following commencement thereofthat are adverseto the holders of Endesa Ordinary Shares. Theprospectus relatingto the U.S. offer inTel.fdnica made clear that, if a holder tenderedinto the Peruvian off@,withdrawal rights would not be available to suchholder, except in the event of a competing offer. The Peruvianoffering documentswere mt mailed into the United States or atherwise disseminated in the United States- Gas Natural will include explicit disclosurein the U.S. prospectus that makes clear that withdrawal rights will not be available to my U.9. holderof Endesa Ordinary Shares who tenders into the Spanish Offer, except under the limited circumstances described herein. In addition, as noted above, Gas Naturd wilt not take any stepsto encourage U.S. holders of Endwa Ordinary Shamsto tender into the Spanish Offer imtead of tbe U.S. Offer. Other than the discIosurenecessary to explainthe fact that sseparate Spanish Offeris being made and that a U.S. holder tendering Endesa Ordinary Sham into the SpanishOffer will not be entitled to withdrawal rights in accordance with U.S. law, the U.S. prospectus will not discuss the Spanish Offi ;errprovide information to U.S. holders as to the
procedures for tenderingEndesa Ordinary Shes into the Spanish Offer. The Spanish prospectus will not be made-publicly availableinEnglish and will not be mailed into the United States or otherwise

Brian V.Breheny, Esq.

Chri~tinaE. Chalk, Esq.

Mad L. OsherofT, Esq.

James A. Brigagliang, Esq. -23- March 2,200fi

A literal application ofRule I4e-5 couldbe interpreted to prohibit purchases of Endma Shares pursuant to the Spanish Offer aftathe announcement of the U.S; offererg Notwifhstmdingthat a dual offer structure is expresslycontemplated and permiBd under the Tierll Reliefprovided hy Rule 14-1(d), we understand that it may be the Commission's position that an individual exmptiofi hm Rule 14e-5 may still be tlecessmy for adud offer structure. aex., Manml ofPublicly Availabk TeJepJeoaeIntepretati~m,Third S~pplenaenfRegnlatiorm M-A, Rule Ide-5, Question 3 (SEC Division of Corporation Finance, July 2001). We believethat the exemptiverelief requested i# this letter is, itl large measure, cantemplatedby or consistat with the exemptiverelief granted in connectionwith other exchange offers similarly structured See, e-n.,In the Matter ofBanco Ba'lbao Yizcay Argentat?#, S.A.for Series B Shares and American DepsifulyShares of Gtlpo Financier0 BBVA Bmcomar, $.A. de C,V.,supra;In the Matter ofTeder O#~Pby Fiateck Mobile Inc.for Grwpolusacell, S.A. ale C.K,supra;In the Muner of Tender U&er by Movil Access, SA. de C.V,fop.GrwoXwacell, S.& He C.K ,syru;lir the Matter of me Pepsi Bottling Group,Ti., BottIittg GroupUCand PBG Gmpoem hot ell do^ Hispano-Mexicano S.L. 's Tender O$rs for Shares, CPOs and GDSs ofPepsi-&ma, S.A. de C.I?, supra;In the Mabter ofSo~themCross' Partial C$fiw fur Sharg~and ADSs of Telex-Chile S.A.,szbpm;Ia the Mrrtter of% AES Corporation Tender Offerfor Shares and ADSs of Compafia'aAndrim NationalTeldfomsde Ve~emela(CAm), supra;In the Matter of Ivax Gorp. 's Second Step Tender Offerfor All Shares and DSs oflaborato~iuChileS.A., supra;lir the Matter ofIwax Cop.'s Tinder Wer Shares and ADSs of Laboratorio Chile SA., supra;In the Matter of&change offers by Telefdru'cu S.A.for TeGecomunicaciTmde Siio Pado Xd., Tele Sudeste CelularPartic@adw S.A., Te~fbrsl'cuHe Argemina S.A. svd Telefhnica ddFed, S.A.A.,supra. Holders of Endesa ADSs and U.S.holders of Endesa Ordinaty Sham will be entitledto participate in the U.S. Off- oneconomicterms as favorable as those offered to holders of Endesa Ordinary Shares inthe Spanish Offer. Further, Gas Nam has taken steps to mure that (i) the procedural terns ofthe Offerswill be w equivalentas practicablypossible, given local law and practice wnsiderations, and (ii)the consideration in the Offers will be the same Although tbmare, in ourvicrw, seriaus doubts as to whether thejurisdictionalpredicate for the application of the Exchange Act -namely, that there be a purchase of a security %y tire use of any means or inmmen~aw ofinterstatecommerce, or ofthemails, or ofany othex fwilityof any national sedties exchange" -would be satisfiedifaforeign issuer such asGas Natural made purcbam of Endesa securitiesoutside the United States, we nonethelessapply, onbWof Gas Natural, for exemptive relief for suchpmhase%hm the provi~ionsofRule I4e-5 pursuant to Rule 14e-5(d), as Set forthid this letter. Weemphasize that this letter does not
reflect madmissionrhatRule 14e5 wdd apply to purchases ofEndesa swuities outside the Waited States m the &mce ofsuch exemptiverelief.

Brim V. Breheny, Esq.

Chistina E. Chalk, Esq.

Mauri L. Oshmff9 Esq.

James A. Brigagliano, Esq. March 2,2006

(except that no GasNatural ADSs will be offered intihe SpanishOff and holders of Endesa Ordinary Shares will be paid the oash wnsidmtionin euros in the Spanish Offi). In addition, Spzmish cowsel has advisedthat, pursuant to the Spanish Takeover Regulations, Gas Natural is prevented from making any market or private purchases of Endesa Shares between the momcement of the Spanish Offer and the annom~emmtofthe results thereofby the CW. We note in this context that grantkgthe relief requested would be a factor f~litating crass-border offers because it would encourage bidders for non-U.S. companies to extend offm to U.S. pasons. Because the pr~paseddual offer structure hivespurchasespursuant tothe non-US, exchangeoffa,,it does not present fhe same risks as would open market or private purchases, and the policies formingthe basis for Rule 14e-5 would not be violated if the exemption requestedis granted. Gas Natural's intention tomake purchases pursuant to the Spanish Offer willbe fully disolosed inthe U.S. prospectus to be delivered to U.S. boIdm of Endesa Ordinary Shares and all holders of Endesa ADSs, ad thatholders who tender into the U.S. Offer will be entitled to receive the same considerationpaid per Endesa Share as will be paidpmt topurchasesunder the Spanish Offer (except that holders who tder into the U.S.Offer will be paid the cash considerationin U.S. dollars).
Section i-4(d1(5)Issues
Section 14(d)(5) of the Exchange Act provides, among other things, that securities
tendered in a tender offermay be withdraw at any time after 60days frm the date of the original tender offer. It is possible that the 660day hm wmencmmt of the Offers may occur on or after the expiration date of the Offers but prior to the date on which the defmitive results of the 0Rtx-sare announced by the CNMV and Gas Natural amng~to make payment for tendered Endesa Shares in accordance with Spanish law and practice. Under Spanish law, it is not possible to withdraw acceptanceshm an offer under any circumstancesEolIowing expiration ofan offer. As noted ahove, Spanish depositaria are held responsible fm the deliveryof shares tendered into an offeron behalf of their clients and, fhus,couldbe held liable for any transfer of shares which have been tendered into oeer, dess and until such tmdd shares are either accepted for payment and paid by the bidder or the offer is withdrawn andsuch tendered shares are returned to the tendering shareholders. Thus, the withdrawal righfs provided by Section 14(d)(5) will, as of the expiration of the Offers, constitute a direct conflict with the inability to withdraw tendered Endesa Shares after the expiration of the Offers pursuant to Spanish law andpractice. Moreover, following the announcementof the definitiveresults of the OEms by the CNW,Iberclear will block all hdesa Ordinary Shares tendd into the Offmto murethat such Bndesa Ordinary Shares are effectively transferred to GasNatural upan completion ofthe Qff's. Acccrrdingly, we arerequesting exemptive relief fiom the provisions ofSection

Brim V.Breheny, Esq.

ChristinaE.Chdk,Esq.

Mauri L. OshmR, Esq.

J-s A. BrigagIiano, Esq. March 2,2006

14(d)cS) of'theExchangeAct insofar as that sectionwould permit holders of Endesa Shares:
who.tendered intu theU.S. Off= to withdri~lrtheir Endesa Shares at my time which is bath (a) after 60days from the cuTITrnmcement of the U.S. Offer and (b) during the perid followingthe ex'piratimdate of the Offers until the. CNMV determines and .announcesthe definitive~esults of tihe.Offers .md.arrangements are,made for.payment inaccordsncewith Spanish law and pdcr=. We believe that the exmptivereliefrequested in this Ietter is, in large measure, contemplatedby or consistent~5ththe exemptherelief granted in connectionwith other exchange offers similarly structwed. &e.a, In the Matter of BCP CrystalAcquisition GmbH & Cu, ef alfop CelaneseAG, Division of Carporate Finance File No.5-57467 (Few 3,2004); In the Madder ofAlcarnInc.for Common Shares, AD&, BonusAllocatiui~Rights and OCEMBs of Peckkey, Division of CorporationFinance File No. 5-52225, Division of Market Regulation File No. 03-114 (October 6,2003);andIn the Mmer ofSerono SA. O!erfor AU Outstanding Ordimy Shares, AB&, OCEAIVEsand Warnants of Gemet, File No. TP 02-95 (September 12,2002). We alsobelieve that thisrelief is consistentwith the Commission's guidance set forth in the Cross Border Release mdthe principleunderlyingRule 14d1(d)(Z)(iv) which pvides certain Tier 11 relief to allow payment tobe made in accordance withthe requirements of homejurisdiction law or practice. Rule 24d-41d)l21bsiues Rule 14d-4(@(2) under the Exchange Act provides bt, following a material change to a tender offer, suchoffermust remain open for five business days from the date that the material changesto the tender offa mderials are disseminated to security baldas (md, as a result, security holders would continue to be entitledto withdrawal rights during such five business day periodunder Rule 14d-7). We understand that the Staff has taken the position that the waiver or reduction of aminimum tender conditionto an offer canstitutm a ''material change" to suchoffer. See, ex.. SEC Interpretive Rekase Rehting to TenderOferRules, Release No. 34-24296 (April 3,1987). Thus, based onthis position, Gas Natural would be required to extend fie U.S. Offmfor fivebusiness days following any waiver or reductionof the Mink11~3nTender Condition andextendwithdrawalrights in the U.S. Offer during this five business day period. Under Spanish Takeover Regulations, in the event that aminimumtendmcondition to an offer is not satisfied, the bidder must determine whetha to waive such condition or withdraw the ofk before the definitiveresults ofthe offer are amamcadby the CNMV. In accordancewith Spanish regulatory pradice, abidder will determinewhether to waive a minimum tender condition or withdraw the ofh onceit is Momed w&dentially about the results of the offer, which occurs af&r the expiration ofthe offer. Pursuant to Spanish

Brian V.Breheny, Esq.

Christina E. Chalk, Esq.

Mad L.Oshaoff, Esq.

James A, Brigagliano, Esq. March 2,2006

Takeover Regulations and regulatorypractice, afterbeing informed offhe results of the offer

after expirationofthe offer, the bidder is required to confirm in writing tu the CNMV whether

it will waive the minimumtender condition, which may not be later than five businessdays

- after the expiration of the offer. Furhermore,under Spanish law, thewaiver of a minimum terider condition aRathe expiratilon of an ofk does not give rise to any obligationof the bidder to extend the acceptanceperiod ofthe offer or extend withdrawal rights. To the contrary, in accordance with Spanishregulatorypractice, a bidder does not generally determine whether it will waive the minimum tender condition or withdraw ern offer until after expiration of the offer, at which time the bidder is notpermitted under Spanish Takeover Regulations to reopen the acceptanceperiod or extend withdrawal rights. Pursuantto the tams of the Offers, if the hdinimum Tender Condition isnot satisfied, Gas Natural is not obligated to oomplete the Offem. As described above, Spanishregulations provide for a centralized countingand reporting system for determixlingthe nmba of shms tenderedinto an offer. horder for the Endesa Sharestendered into the U.S. Offer to be counted forpurposes of determiningthe satisfaction of the Minimum Tender Condition, the Endesa Shares tendered in the U.S. Offer will be included inthis centralized comting and reporting system in Spain,pursuaflt towhich the CNMV will determine and announce the definitive results of the Offers. Tbis announcementmay not be made until afterthe expiration date ofthe Offers (a maximum of fivebusiness days for the Spanish depositaries to report the numbers of tendered shes to the Spanishexchange agent and fbr theSpanish exchangeagent to report the totaI results to the CNMV,and a maximum of three business daysforthe CNMV to determine and announce, the definitive results of the Offas). In fact, pursuant to the Spanish Takeover Regulations,the Wis responsible for announcingthe definitive rmuIts of an offer, whether aminimum tender condition to an offer has been satisfied and, if not, whether the bidder waives such condition or elects to withdraw the offer. If the Minimum Tender Conditionbas not been satisfiedbased on tbe results of the Offer cunfidmtirillyreported by the Spanish exchange agent to the CNMV and Gas Natural prior to the CNMV's determination and announcement, Gas Natural shodd be permitted to determinewhether it will withdraw the 0% as a result ofthe failure of such condition to the Offers or whether it will waive such condition and accept the tendered Endesa Shares for payment. We believe that permitting Gas Natural to relyupon or waive the Minimum Tender Condition, notwithstandingthat the Offers will have expired so that no Mer acceptancesmay be made and that tendering holders of Endesa Shares will no longerhave withdrawal rights, is consistent with Tier11Relief under Rule 146-1(d)(2)(v), which expressly permits a bidder, notwithstding Section 14(d)(5) af the Exchange Act, %ot to extend withdrawalrights follrwving the close of the offer and prior to the coxnmencementof the subsequentoffering period," We also believe that permitting Gas Natural to prod inthis manner is consistent

Brim V.Breheny, Esq.

Christina E. Chalk, Esq.

Mauri-L. Osheroff9Esq.

:JamesA Brig&&ma,,Esq. March 2.2006

.withtheprinciples-of TierIIReliec which generaIly deferto'home.jurisdiction law and practice with respect toprocedure. Inthe Cross Border Release, the Commissionstated that it would not object if bidders meetingthe requirements far the Tier IIexemptionrdulce or waive the minimumtender conditionwithout extendingwithdrawal rights during theremainder ofthe offer (unless an extension is requiredby Rule 14e-11, if certain conditions are met. Inaccordance with the Commission's intqretation of the Tier 11exemption as set forth in section II.B of the Cross Border Release, if Gas Natwal determines that it may reduce or waive the Minimuan Tender Conditionfollowingthe expiration date of the Offers, Gas Natural will announce that it may reduce or waive the Minimum Tender Condition by pressrelease andpublicationin a newspapa of general circulation in the United States five U.S.business days prior to the scheduled expiration date of the Offers. Gas Natural will file this mouncement with the Commission via EDGAR on the date that such armomcement ismade. The announcementwill state the exact percentagetowhich the Minimum Tender Condition may be reduced or waived and state that such reduction or waiver is possible. Theannouncement will adviseholders of Endesa Shm to withdraw their acceptances immediately if their willingnessto ac-t the U.S. Offer would beaffected.by a reduetion or waiver of the Minimurn Tender Condition mdwill inform holders of Endesa Shares that theywill not be able to tender Endesa Shes or withdraw their acceptances followingthe expirationdate of the U.S. Offer. Inaddition, €he mouncemmtwill advise holders of Endesa Shares that, as a result ofthe Spanishexchange offer rules and practice, the dduitive results of the Offers willnot be announced by the CNMV until approximatelysix business days following the expiration date of the Spanish Offer and that GasNatwal will be required to determine whether it will reduce orwaive theMinimum Tender Condition after the expiration of the Offm andprior tosuchannouncement. kng the five U.S. business dayperiod following such announcement, holders of Endesa Shares who have tendered Endesa Shares into the U.S. Offer will have withdrawal fights. The U<S.Offer will provide th~tholders of Eadesa Shares may accept the U.S. Offer andwill have withdrawal rightswith respect to any Endesa Shares tendered into the U.S. Offa until the expiration of the U.S. Qffer. However, upon the expirati~nof the U.S. Offer, nu Mer acceptances of the U.S. Offer will be permitted and Whdrawal rights will not be extended. We note that, in addition to the Commissi~:'~interpretation of the Ties II exemption as set hrthinseotion U.Bof the Cross Border Release, the Staff has granted relief t~ permit bidden for U.K.companies to publicly announoe the possibilityof areduction in a minimum tender condition five business days prior to the date on which any suchreductionmay occur in accordance with the foregoingpra&es and, thereafter, declare
theoffaunconditional and termhate withdrawal rights. See, e.& SERENA SoJih..are,Iw. OfirforSk~msndAEISs of Merantplc, Exchange Act File No. 5-45819 (ApriI 13,2004);Arne& Hess Corporatian

Brian V.Breheny*Esq.
Christina E. Chalk, Esq.
Mawri L.Osheroff, Esq.
Jmes A. Brigingliano, Esq. merfor Shares and ADSs af LASMOplc, Exchange Act File No. 5-52225 (December13, 2000); and TheRoyal Bank ofircotdund Groupplc 0g.rfar Shares and ADSs ofNafional WestminsterBa& PLC, Exchange Act File No. 5-55229 (December 27,1999). hthese cases, each ofwhich involved an offer for a U.K.company, following the date on which the bidders declared the offer unconditional and terminated withdrawal rights, the bidders commenced a subsequent offering period of at least 14 days inaccordancewith U.R law. Spanish law does not provide for any subsequentofferingperiod. Thus, althoughthe Offers will not be declaredutmnditional onthe date thatthe Offas expire and witpidrawal rights tenminate,-incontrast to the U.K. cases, Gas Natural will not be able to acquire any additional Endesa Sharespursuantto the Offm &a the tarnination of withdrawal rights on the expirati~nof the initial offering period. Rather, GasNatural will be requiredto makeits determinatian of whether to reduce orwaive the Minimum Tender Condition, or withdraw the Offers, at a time when it will not be able to benefit froma future acceptanceperiod which does not allow withdrawal rights. Altho@ the U.K.aes referenced above did not involve a terminationof the acoeptaace period following a waiver of aminimum tender conditionby a bidder, inthis case, the ~eqeningofthe acceptanceperiod following expirationof the Offers is not permitted wder Spanish Takeover Regulations. In addition, Ibaclew will block all Endesa Ordinary Sham tendered into the Offers immediately following the announcementofthe results of the Offm by the CNMV. hlight of the direct conflict with U.S. law and regulationpresented by Spanish regulatory procedures and tender offerpracticeas well asthe Staffs prior willingness to permit bidders.to tamhate withdrawal rights despite a mncurrent or subsequentwaiver of the mumtender condition, we believethatstherequestedrelief to forego an extension period of five business dztys, which could otherwisebe required under Rule 14d4(d)(2) inthe event that Gas Natural reducesor waives the Minimum Tender Condition,Isjustifid md mnsistent with the principles of Tier IIRelief. Furthemore, Gas Natural will publicly amounce the possibilitythat it may reduce or waive the Minimum Tender Condition, state the exactpercentage to which the Minimum Tender Condition may be reduced or waived and include the lothex disclosuresdescribed abve in accordancewith the commission"^ interpretation of the Tier I1 exemptionasset forth in section LI.8of the Cross Border Release, Thus, holders of Endesa Shares will have full disclosure, for a period of fiveU.S.business days prior to the expiration of the U.S. Offer, of the possibilitythat Gas Natural will waive or reduce the Minimum Tender Condition and that, fallowing any such waiver or reduction, no further acceptancesor withdrawal rights will be permitted Webelieve that that: the relief requestedfrom the applicationof Rule.14djQ(d)(Z) should be
applicableif a competingbid is commenced. In the event that the proposing competing offer announcedby E.ON is approved by the CNMV and also satisfies all other applicable

Brian V.Breheny, Esq.

ChristinaE. Chalk, Esq.

Mauri L.Oshaoff, Esq.

James ,A.Brigagliano, Esq. March 2,2006.

regulatoryhurdles, the expiration date of the Offers would he modified to be a minimum of one month from the date that such corn-g offer commences and a miahurnof15 den& days following publication of anyimproved tams by Gas Nahual andlorE.ON. Holders of Endesa Shareswhohave tendered Endesa Shares into the U.S. Offer will have withdrawal rights until such modified expiration date. Becawe the arrnomced tams ofE.ON's proposed competing offer include a conditionthat a minimum of 529,423 1,934Endesa Shares, representing50.01Q/"o of the share capital ofEndesa, aretendered into such competing offer, if the E.ON offer is commd, my improved terms of the Offers propoeed by Gas Naturd would be required to include a minimum tender condition of no more than50.01% of Endesak h e capital. If a competingbid is commencedand Gas Natural improvesthe terms ofthe Offers, GasNatural will disseminate to holders ofEndesa Shm a prospectus supplement setting forth suchimproved terms. Tn such supplement, Gas Natural willinclude additional risk factors relatingto the possibilitythat, if the Offers and the competing offer are completed aud the respective minimum tender conditions included in the Offm and the competing offer are waived ar reduced, Gas Natural and the ctrrnpetingofferor could each own significaat percentages ofEndesa, with neitherhaving effectivecontrol. If, thereafter, GasNatd determines that it may waive its minimum tender condition, it will follow the steps described above, inchdingthe issuance, no fewer than five U.S. business daysprior to the scheduled expirationdate of the U.S. ORer, of an mouncment that will be disseminatedvia press release, publishedin a newspaper of general circulationinthe United States and filed with the Commissionvia the EDGAR filing system. Consequently,the holders ofEndesa Shares will have adequate opportunityto withdraw qtendered Endesa Shwesprior to the expirationaf the U.S,Offer once they are informed of the possible waiver or reduction of GasNatural's minimumtender condition. The Spanish regulatory scheme, by limiting the ability of the kt offeror strrd a competingofferor to improve the terms of their respectiveoffers tb a single opportunity and thereafter requiringboth offers to e~pir~ on the same date, creates the possibility that, if neither offa is clearly superior, theofferors may waive their respective minimum tender conditions and, consequently,neibr oRmr may ohin a majority of the subject company's share capital. This is a unique feature of Spanish law. Gas Natural believes that a competing offer context is not materially different from a situationinwhich Gas Natural might itself acquire, in the:
absence of a competing offer,less than 50.01% ar more flm50.01%ofEndesa's share capital andbe unable to exert control (due to the 1Q% voting limitationin Endesa's bylaws or other factow). In either the circumstancesofGasNatural being the sole offeror or the commencemmt of a competingoffer, the post-completion control of Endesa remains potentially in doubt, which is a disclosure issue appropriately addressed in the prospectus, any supplement there40 and any additional filings with the Commission. Furthermore, because

Brian V.Breheny, Esq.
Christina E.Chalk; Esq.
Maui L. Oshm.ff,Esq.
Jmes A. Brigagliano, Esq.
Spanish law andregulations do not expresslyprovide for dual offers, we understand fiom Spanish counsel that, as disclosedinthe Registration Statement, inorder far Endesa Shares tendered into the U.S. Offato be counted for purposes of detamhing the satisfactionof the minimumtender condition, following expiration of the U.S. Offer, the US.exchange agent must cause the Custodian to irrevocablytender, with anirrevocable order to transfer, the Endesa Shares tendered in the U.S. Offer tothe Spanish exchange agent to be included in the centralized counting and reportingsystem h Spain. There is no systemic or regulatory pmvisian, as a ma- of Spanish law orpractice, that would permit tendering holders of Endma Shares to withdraw such tendered Endesa Shares after the expiration date. Rule l.4d-l0la)lllRelief We herebyrespectfullyrqusst exemptiverelieffmm the provisions ofRule 14d10[a)(l) promulgated under the Securities aad Exchange Act of 1934, aamended (the *'ExchangeAct"), to pamit GasNatural to make the Offers utilizingthe dual offer structure as described in this letter pursuant to which Gas Natural will make the U.S. Offer availableto all holders of Endesa ADSs, wherever located, and all holders of Endesa,Ordinary Shares who are U.S. holders and will make the Spanish Offer availableto all holders of Endesa Ordinary Shares (includingU.S.holders). Rule,14e-5 Relief We herebyrmpecthlly request exemptiverelief from the provisions of Rule 14e-5. under the Exchanp Act to .allowGas .Naturalto purchaseEndma Ordin,arySharespwuant to the Spanish Offer afterthe public announcement, but pribr to the expiration, ofthe U.S. Offer.
Section 141d)lSI Relief
We hereby respectfully request exemptive relief from the provisions of Section 14(d)(5) underthe Exchange A& to dow Gas Natural to terminate withdrawal rights at the expirationof the initial offeringperiod for Endaa Shm tendered intothe US.Offer during that period. Rule 14d-4[d1121Relief Wehereby respectllly request.exemptive relief.from the provisiom of Rule 14- 4(d)(2) under the.ExchangeAct to pennit Gm.:Natural,following the expiration.ofthe.U.S. -0ffer;ta waive or i-educethe Minimum Tender Conditiofi, iil the event that the Minimum

Brian V. B:rehmy,Esq.
Christina E.ChaIk, Esq.
MMP~ L. Osht~off, Esq.
James A. B~igagiano,Esq. -31- March 2,2005
Tender Condition has not been satisfied, without extendingthe W c e period or extending withdrawal rights, in accordancewith the process presmiedhy Spanish law and regulation. We appreciate your he andattention to this matter. Please do not haitate to contact meif you havequestions or would like ta discuss the above,iismesMa. cc: Paul Dudek, Esq. David Mittelman, Esq. Michael Pressman, Esq. Division of CorporationFhmce, Securities and Exchange Camisswn Matthew bd,on,,Esq.

Racqud Russell, Esq.

&y&& ofMEXtketRwfarioa Semgh ad &.change &mmiSSSiOn

Manuel Garcia CoMeda, Esq.
Gas Nattrrd SDG, .S.A.
Kathyn King.Sudol,.Esq.
Simpson Thacher & Bartie# LLP

Incoming Letter 1

Incoming Letter 2