February 21, 2003

Patrick J. Scheil, Esq.
Linklaters
10th Floor, Alexandria House
Chater Road
Hong Kong
China

Re: UBS AG, London Branch and J.P. Morgan Securities Limited
File No. TP 03-40

Dear Mr. Scheil:

In regard to your letter dated February 17, 2003, as supplemented by conversations with the staff, our response is attached to the enclosed photocopy of your correspondence. By doing this, we avoid having to recite or summarize the facts set forth in your letter. Each defined term in this letter, unless otherwise noted, has the same meaning as defined in your letter.

Response:

You request an exemption from Rule 14e-5 under the Securities Exchange Act of 1934 (Exchange Act) to permit UBS AG, London Branch and J.P. Morgan Securities Limited to engage in market-making activities in the Ordinary Shares of Dairy Farm International Holdings Limited (Company) during the Offer. Rule 14e-5, among other things, prohibits a person making a cash tender offer or exchange offer for any equity security from, directly or indirectly, purchasing or making any arrangement to purchase the security (or related securities) otherwise than pursuant to the offer from the time the offer is publicly announced until its expiration, including any extensions. Rule 14e-5 applies to the offeror's dealer managers, stockbrokers, and financial advisers, and their affiliates, because these entities act as the agent of the offeror to facilitate the offeror's objectives.

On the basis of your written representations and the facts presented, particularly in light of the facts that:

• The Company is a "foreign private issuer," as defined in Rule 3b-4(c) under the Exchange Act;
   
• During the Offer, UBS AG, London Branch and J.P. Morgan Securities Limited will comply with the "Ethical Wall" requirements of the U.K. City Code on Takeovers and Mergers (U.K. City Code) applicable to "Exempt Market Makers;" and
   
• UBS AG, London Branch and J.P. Morgan Securities Limited maintain, and during the Offer will continue to maintain, "Ethical Wall" arrangements in accordance with rules of the Financial Services Authority;

but without necessarily concurring in your analysis, the Commission, by the Division of Market Regulation acting pursuant to delegated authority, hereby grants an exemption from Rule 14e-5 to permit UBS AG, London Branch and J.P. Morgan Securities Limited to make a market in the Ordinary Shares during the Offer. This exemption is subject to the following conditions:

1. No purchases or arrangements to purchase Ordinary Shares, otherwise than pursuant to the Offer, will be made directly or indirectly on behalf of the Company;
    
2. All purchases of Ordinary Shares by UBS AG, London Branch and J.P. Morgan Securities Limited during the Offer will be effected in the ordinary course of business and in compliance with any U.K. laws and rules applicable to such purchases, and will not be undertaken for the purpose of promoting the Offer, or for the purpose of creating actual, or apparent, active trading in, maintaining, or affecting the price of the Ordinary Shares;
    
3. No purchases or arrangements to purchase Ordinary Shares, except as part of the Offer, will be made in the United States;
    
4. The Offer document will disclose that UBS AG, London Branch and J.P. Morgan Securities Limited will be market makers for the Ordinary Shares during the pendency of the Offer;
    
5. The Offer Document will disclose prominently that, during the Offer, all market-making transactions effected by UBS AG, London Branch and J.P. Morgan Securities Limited will be made pursuant to the exemption from Rule 14e-5 granted herein;
    
6. UBS AG, London Branch and J.P. Morgan Securities Limited shall disclose in the United States information regarding such purchases to the extent such information is required to be made public in the United Kingdom pursuant to applicable requirements in the U.K.;
    
7. UBS AG, London Branch and J.P. Morgan Securities Limited will provide to the Division of Market Regulation, upon request, a daily time-sequenced schedule of all purchases of Ordinary Shares made by UBS AG, London Branch and J.P. Morgan Securities Limited during the Offer, on a transaction-by-transaction basis, including the size, broker (if any), time of execution, and price of purchase;
    
8. Upon the request of the Division of Market Regulation, UBS AG, London Branch and J.P. Morgan Securities Limited shall transmit the information as specified in paragraph 7 to the Division of Market Regulation at its offices in Washington, D.C. within 30 days of its request;
    
9. UBS AG, London Branch and J.P. Morgan Securities Limited shall retain all documents and other information produced pursuant to this exemption for a period of not less than two years from the date of the termination of the Offer;
    
10. Representatives of UBS AG, London Branch and J.P. Morgan Securities Limited shall be made available (in person at the office of the Division of Market Regulation or by telephone) to respond to inquiries of the Division of Market Regulation relating to their records; and
     
11. Except as otherwise exempted herein, UBS AG, London Branch and J.P. Morgan Securities Limited shall comply with Rule 14e-5 during the Offer.

The foregoing exemption from Rule 14e-5 is based solely on your representations and the facts presented, and is strictly limited to the application of this rule to the proposed transactions. These transactions should be discontinued, pending presentation of the facts for our consideration, in the event that any material change occurs with respect to any of those facts or representations. In addition, your attention is directed to the anti-fraud and anti-manipulation provisions of the Exchange Act, particularly Sections 10(b) and 14(e), and Rule 10b-5 thereunder. Responsibility for compliance with these and any other applicable provisions of the federal securities laws must rest with the Company, UBS AG, London Branch and J.P. Morgan Securities Limited. The Division of Market Regulation expresses no view with respect to any other questions that the proposed transactions may raise, including, but not limited to, the adequacy of disclosure concerning, and the applicability of any other federal or state laws to, the proposed transactions.

Incoming Letter

http://www.sec.gov/divisions/marketreg/mr-noaction/linklaters022103.htm