Re Press Speculation

Pennon Group PLC
17 May 2004


                                                                     17 May 2004

Following press speculation, the Board of Pennon Group Plc ('Pennon' or 'the
Company') confirms that it is in discussions with Shanks Group Plc regarding the
possible acquisition of Shanks's UK landfill and landfill gas assets, in pursuit
of Pennon's stated strategy. These discussions are continuing and are at an
advanced stage.

Any such acquisition would have to satisfy Pennon's normal criteria for any
investment in the waste management sector, as well as reinforcing Pennon's
progressive dividend policy. There can be no assurance that any such acquisition
will be agreed.

The Board of Pennon also confirms that it has received a preliminary and
conditional approach for the entire issued share capital of the Company from a
consortium of financial investors led by Terra Firma. The Board unanimously
decided that the approach failed to recognise the strategic value of Pennon, its
track record and the future prospects of Pennon's two core businesses. South
West Water has consistently outperformed its regulatory contract while Viridor
Waste continues to offer significant opportunities for earnings growth.
Therefore, following consultation with some of Pennon's largest shareholders,
the Board rejected the approach.

A further announcement will be made when appropriate.

Enquiries:

Finsbury   020 7251 3801
Edward Orlebar
James Murgatroyd




                      This information is provided by RNS
            The company news service from the London Stock Exchange