Diageo and Lehman Brothers International (Europe) have entered into an agreement through which Diageo has bought put options on 25m shares of common stock in General Mills, exercisable from 4 November, from the investment bank.

Under the deal, announced today (25 August), Diageo has the option to sell 25.1m General Mills shares at US$51.56 per share to Lehman Brothers International between 4 November and 10 November. If the put options are exercised, the proceeds from the sale after costs would be US$1.15bn, the drinks company said.

Diageo received 134m shares in General Mills, the Minneapolis-based food group whose brands include Cheerios and Lucky Charms, when it sold its Pillsbury food business to the US group for US$10.4bn in 2001. It has reduced its holding over time but its remaining 25.1m shares still make the UK drinks group the largest individual shareholder in General Mills.