MINNEAPOLIS (AP) -- Golden Valley-based General Mills Inc. is buying control of Minneapolis-based Pillsbury Co. for $5.4 billion in stock, creating the world's fifth-largest food company.
General Mills also will assume $5.1 billion in debt as part of the deal with Pillsbury's parent, British food and drinks conglomerate Diageo PLC, the companies said Monday.
According to a company statement, General Mills will issue 141 million new shares of common stock to Diageo in exchange for control of Pillsbury.
John McGrath, Diageo chief executive officer, said the combined Pillsbury-General Mills will become ''a major new force in the changing U.S. food industry.''
The combination would nearly double the size of General Mills to about $13 billion in annual sales. General Mills offers such well-known brands as the Cheerios and Chex line of cereals, Betty Crocker and Bisquick cooking mixes and Yoplait and Columbo yogurt.
The merger of the crosstown rivals is expected to become final by the end of the year and is likely to result in job losses at both Pillsbury and General Mills, though company officials said it is too soon to say how many.
The merger is subject to approval by shareholders, the Securities and Exchange Commission and the Federal Trade Commission.
The acquisition also will lead General Mills to sell two Pillsbury units: Green Giant canned vegetables and Pillsbury dessert mixes. Together, General Mills and Pillsbury would control most of the baking-mix market, making it necessary for General Mills to divest itself of Pillsbury's holdings in that category to avoid antitrust problems.
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