E-Malt.com News article: UK: Diageo purchases put options over 25 million General Mills shares

On 24 August 2005, Diageo and Lehman Brothers International (Europe) entered into a put option agreement under which Diageo purchased European-style put options exercisable beginning 4 November 2005, covering 25 million shares of common stock of General Mills from Lehman Brothers. Under this agreement, Diageo has the option to sell all of its remaining 25 million shares of common stock of General Mills to Lehman Brothers for settlement over five business days between 4 and 10 November 2005, for the exercise price of $51.56 per share. The premium to be paid by Diageo for the put options is $5.56 per share, payable at the time of settlement. While the sale of these shares is subject to market conditions and contractual restrictions, Diageo is committed to the disposal of its holdings in General Mills and previously sold in 2002 call options to General Mills for a premium of $3.07 per share. Diageo views this transaction as an effective hedge for the disposal proceeds of its remaining stake in General Mills.

Diageo will continue to retain the rights to ordinary dividends while it remains an owner of the General Mills shares.

Commenting, Paul Walsh, CEO of Diageo, said “We are delighted to be able to make this announcement today. This transaction gives us certainty as to the disposal proceeds we would receive from a disposal of our remaining holding in General Mills which could take place in November this year at $1,154 million net of costs.

Coming as it does less than two months after the refinancing of Burger King, Diageo is now fully focused on its position as the world’s leading premium drinks company “.

Diageo is the world's leading premium drinks business. Diageo brings to consumers an outstanding collection of beverage alcohol brands across the spirits, wine and beer categories . Diageo trades in some 180 countries around the world.


30 August, 2005