Diageo Agrees Call Option

Diageo PLC
23 October 2002
                                                            23 October 2002


Diageo agrees call option with General Mills

General Mills has issued an announcement stating that it has agreed to issue
$1.35 billion aggregate principal amount of convertible debentures ($1.50
billion aggregate principal amount if an initial purchasers option is exercised
in full). The debentures are convertible into an aggregate of 26,183,088
ordinary shares of General Mills (29,092,320 ordinary shares of General Mills if
the initial purchasers option is exercised in full).

On October 23, 2002, Diageo granted to General Mills a call option over
26,183,088 of General Mills' ordinary shares that are held by Diageo and, if the
initial purchasers option is exercised, Diageo expects that it will grant
General Mills a call option over up to an additional 2,909,232 of General Mills'
ordinary shares. The premium for the call option is $3.07 per share or an
aggregate of $80,382,080.16 ($89,313,422.40 if the initial purchasers option is
covered in full). The strike price for the call option is $51.56 per ordinary
share of General Mills. The options expire on October 28, 2005.

Under the call option agreement, subject to restrictions on exercise in the
first year, through September 28, 2005, General Mills may exercise the option in
whole or in part at any time in respect of up to 5,000,000 shares provided that
(1) such exercises are in respect of issuances under its convertible debentures
and (2) such exercises would not cause Diageo to hold less than 20% of the
outstanding ordinary shares of General Mills. From September 29, 2005 through
the expiration of the call option on October 28, 2005, General Mills may
exercise the call option without restriction provided that, if General Mills
exercises the option during that period, General Mills will be obligated to
exercise the option in respect of all ordinary shares covered by the call option
agreement that were not previously purchased.

Diageo currently owns 79,000,000 ordinary shares of General Mills. Diageo has
agreed with General Mills not to transfer the ordinary shares of General Mills
underlying the option during the term of the option, except pursuant to an
exercise of the option and certain limited circumstances. Diageo also has agreed
not to transfer any ordinary shares of General Mills currently held by Diageo
prior to July 1, 2003, subject to certain limited exceptions. Because Diageo
retains ownership of the ordinary shares subject to the call option, it retains
the contingent value rights associated with those ordinary shares.

The option premium paid to Diageo will, under UK GAAP, be deferred in creditors
on the balance sheet and only reflected in the profit and loss account on the
exercise or lapse of the option at the end of the option period in three years'
time.

The entry into the call option does not affect the accounting treatment of
Diageo's 21.46% equity investment in General Mills as an associate.

                                     ends-

For further information please contact

Investors Relations    Sarah Pollard    020 7927 4250    [e-mail]

                       Kelly Padgett    +00 1 202 715 1110

Media enquiries        Isabelle Thomas   020 7927 5967    [e-mail]


                      This information is provided by RNS
            The company news service from the London Stock Exchange