Diageo raises €1.84bn from share sale

Diageo has raised $2.26bn (€1.84bn) from the sale of 49.9 million shares of common stock held in US-based Cheerios cereal maker General Mills.

The shares were sold for €45.20 before fees. Four million shares were transferred to the Diageo UK pension plan reducing the deficit on post employment plans by £100m (€145.5m)

The profit on disposal, before tax and goodwill written back, is approximately $370m (£205m/€301.4m)

Diageo now holds 25 million shares of the common stock of General Mills and said today that these holdings "could be monetised after October 2005".

Diageo boss Paul Walsh said: "We had targeted a disposal of these shares in calendar 2004. By way of this transaction we have monetised the majority of our holding in General Mills with now only 25 million shares still in our ownership."

Diageo gained the stock as part of a £7bn (€10bn) deal in 2001 to sell food maker Pillsbury to General Mills – a key part of its drive to focus on drinks such as Guinness, Johnnie Walker whisky and Smirnoff vodka.

The stake originally stood at 134 million shares but today’s sale of 49.9 million shares reduces Diageo's interest in General Mills to 25 million shares – worth around $1.1bn (£616.7m/€895.5m).