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General Mills completes its acquisition of Pillsbury

GOLDEN VALLEY, Minn. — General Mills on Wednesday completed its acquisition of Pillsbury from London-based Diageo PLC in a transaction worth $5.9 billion.

Under terms of the final agreement Diageo will receive 134 million shares of General Mills common stock, at $44 per share.

General Mills will also assume $4.5 billion in debt, of which $670 million may be paid to Diageo in whole or in part 18 months after closing, depending on General Mills stock price at that time and the number of General Mills shares Diageo continues to hold.

If the General Mills stock price is less than $49 per share at the 18-month anniversary, Diageo will receive an amount per share equal to the difference between $49 and the actual General Mills stock trading price, up to a maximum of $5 per share that Diageo owns at the anniversary date.

As part of the final shareholder agreement, Diageo has an option to sell directly to General Mills 55 million shares of General Mills common stock at a price of $42.14 per share.

The terms were modified somewhat from terms of the original agreement announced on July 17, 2000, the companies said.

The final agreement also includes a provision under which Diageo is precluded from buying additional shares in General Mills for 20 years following the close of the transaction, or for three years following the date on which Diageo owns less than 5 percent of General Mills' outstanding shares, whichever is earlier.

The agreement also generally requires Diageo to vote its shares in the same proportion as the other General Mills shares are voted.