Fed fight over Diageo's £7.5bn food sale

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The Independent Online

Paul Walsh, chief executive of Diageo, was this weekend in desperate negotiations to save the $10.5bn (£7.25bn) deal to sell the drinks giant's Pillsbury subsidiary to General Mills of the US.

The talks are aimed at persuading the US Federal Trade Commission (FTC) to let the deal go through. Diageo and General Mills hope to sell some of their dessert and pastry businesses to International Multifoods in order to gain FTC approval.

The FTC is due to meet on Tuesday to consider the merger, which was first announced in mid-2000. Word from Washington is that approval is on a knife edge, and if Diageo thinks the deal may be blocked, it may press for more time to seek a solution.

A week later, Diageo is expecting to find itself back in front of the FTC, albeit expecting better news, as the US regulator approves the $8.2bn sale of the Seagram drinks business by Vivendi Universal to Diageo and Pernod Ricard of France. The deal has been approved by Brussels; the Canadian authorities have indicated they will give it the go-ahead this week.

If both the Pillsbury and Seagram deals are approved, then Mr Walsh will have completed most of the restructuring of Diageo, with only the sale of the troubled Burger King restaurant chain still outstanding.