Diageo gets the Pillsbury dough

IT IS proving to be one of the biggest games of pass the parcel in corporate history. And there are still billions of pounds of assets to change hands.

Drinks group Diageo has finally completed the sale of its US food business Pillsbury - famous for its Doughboy mascot.

The sale to General Mills, worth around £7bn, should enable it to begin buying back its shares. The prospect took the price up 13 1/2p to 700p. But this is by no means the end of a huge exercise which will cost a small fortune in bankers' and advisers' fees. Two other blockbuster deals are still waiting in the wings.

Diageo boss Paul Walsh has teamed up with French group Pernod Ricard to take over the mighty Seagram drinks empire for nearly £6bn. He is keen to focus Diageo on premium drinks where it has brands such as Smirnoff vodka, Guinness and Johnnie Walker whisky.

But the takeover is turning into a rum affair. Diageo may be forced to sell its own coconut Malibu rum brand worth £650m so that it does not offend US regulators by having a dominant position in the market.

This is because Seagram has the Captain Morgan brand which was one of the attractions of bidding in the first place - although a Puerto Rican firm is claiming that it has first refusal on the drink.

A compromise still has to be thrashed out. Walsh's deal-making is far from over. His dream of a drinks-only giant means he is still waiting for the opportunity to unload its Burger King chain, either through a sale or flotation.