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Last Updated: Tuesday, 5 October, 2004, 10:15 GMT 11:15 UK
Diageo says Cheerio to US stake
Bottles of Smirnoff Vodka
Diageo owns some of the best known brands of drinks
Diageo, the world's biggest spirits company, is selling most of its 20% stake in US food company General Mills to ease its 4.5bn ($8bn) debt burden.

The company will raise 2.14bn from the sale of 49.9 million shares in the US cereal maker, which makes brands such as Cheerios and Wheaties.

Diageo said profit from the sale was about $370m before tax and goodwill.

The maker of Smirnoff vodka said the sell-off was part of its strategy to focus on its core drinks business.

"Today's transaction represents one of the last steps on our strategic journey to build the world's leading premium drinks business," said Diageo chief executive Paul Walsh.

Diageo's famous brands includes Guinness stout and Johnnie Walker whisky.

The group still has 25 million General Mills shares, which cannot be sold until October 2005.

Diageo took possession of General Mills' shares after disposing of its Pillsbury packaged food business to the US group in October 2001.

It sold 16.6 million of the shares back to General Mills, while rest will be sold to the public in a underwritten offering.

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