Last June, US giant General Mills Inc agreed to purchase rival company Pillsbury Co from its UK-based parent Diageo. Market watchers blessed the US$10.5bn buyout as a perfect marriage and the companies expected to finalise the arrangement by the end of last year.
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The deal has still not been closed however, and according to the latest information from GIS, it might not actually be completed until July. Last month, GIS filed a note with the Securities and Exchange Commission to the effect that either party would have the right to pull out of the deal on 30 June without penalty if the deal is still nowhere near completion.
The delay has been caused by competition concerns raised by the Federal Trade Commission (FTC) over the impact a link up between the General Mills and Pillsbury’s brands would have on the wider food industry. Pillsbury’s well-known brands, which include Dough Boy, will undoubtedly prove a valuable asset to General Mills’ portfolio, but regulators raised concerns about the market control of the combined company.
In a bid to appease the FTC, General Mills agreed to sell Pillsbury’s desserts and specialty-products business to International Multifoods Corp for around US$305m. But this is still not enough, and tussles have continued about the various restrictions General Mills attempted to impose on the deal with regard to the Pillsbury brand name.
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By GlobalData
