Disposal

Diageo PLC
05 October 2004

PRESS RELEASE

                                                                  5 October 2004

Diageo raises $2.26 billion from sale of 49.9 million shares of common stock of
General Mills

SUMMARY

  • Diageo has today sold 49.9 million shares of common stock held in General
    Mills for $45.20 per share before fees

  • Diageo has transferred 4 million General Mills shares to the Diageo UK
    pension plan reducing the deficit on post employment plans by £100 million

  • The profit on disposal, before tax and goodwill written back, is
    approximately $370 million ( £205 million)

  • Diageo now holds 25 million shares of the common stock of General Mills
    which could be monetised after October 2005


Commenting, Paul Walsh, Chief Executive Officer of Diageo, said

'We had targeted a disposal of these shares in calendar 2004 and we are
delighted to be able to make this announcement today. By way of this transaction
we have monetised the majority of our holding in General Mills with now only 25
million shares still in our ownership. Today's transaction represents one of the
last steps on our strategic journey to build the world's leading premium drinks
business'.

THE TRANSACTION

Diageo has today agreed to sell 49,907,680 shares of common stock held in
General Mills for $45.20 per share. 33.3 million shares were sold in an
underwritten secondary offering and the balance to General Mills, Inc. Subject
to customary closing conditions, settlement is expected to be on 8 October 2004
and Diageo expects to receive $2.14 billion after underwriting and other
transaction costs.

Diageo has also announced today that it has transferred 4 million shares of the
common stock of General Mills which it owns to the Diageo UK pension plan. At a
valuation of $45.20 per share and at a $1.78/£1 exchange rate this will reduce
the total deficit, after taxation, for Diageo's post employment plans, which at
30 June 2004 totalled £750 million, by £ 100 million.

The shares to be disposed of and transferred total 54 million and at 30
September 2004 had a book value of $2.0 billion. Therefore there is a profit on
disposal before goodwill write off of approximately $370 million. After the
write back of previously written off goodwill the disposal is currently
anticipated to give rise to an exceptional loss, before tax, of $70 million.

The disposal proceeds will initially be used to reduce net debt. Diageo intends
to make a further communication in due course in which it will, following formal
Board approval, confirm the future capital structure of the company.

On 31 October 2001 Diageo disposed of its Pillsbury packaged food business to
General Mills as part of the decision to focus on premium drinks. The
consideration for the disposal included 134 million shares in the common stock
of General Mills. Since that date Diageo has reduced its shareholding by 109
million shares, including the transactions which have been announced today.
Diageo retains 25 million shares of the common stock in General Mills which are
valued at $1.1 billion as at 4 October 2004 and which are subject to a call
option with General Mills expiring in October 2005.

For the year ending 30 June 2005 Diageo accounts for its shareholding in General
Mills as an investment and dividends received are included in the profit and
loss account. Following this transaction the remaining 25 million shares in the
common stock of General Mills which Diageo holds will continue to be accounted
for as an investment at a book value of $910 million. Dividends received in
respect of these shares will continue to be included in the profit and loss
account.

Citigroup, Merrill Lynch & Co., Morgan Stanley and Lehman Brothers are acting as
representatives of the underwriters. UBS Investment Bank is acting as financial
advisor to Diageo. Sullivan & Cromwell LLP are acting as U.S. legal counsel and
Slaughter and May as English legal counsel to Diageo.

This press release shall not constitute an offer to sell or the solicitation of
an offer to buy securities either in the United States or any other
jurisdiction, nor shall there be any sale of these securities in and
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration and qualification under the securities laws of any such
jurisdiction. Any offer of securities and each announcement thereof is being
made in compliance with, and any documents related thereto comply with, the laws
and regulations of each state where persons to whom such offer is made are
resident. Any public offering of securities in the United States is being made
solely by means of a prospectus supplement to the prospectus included in the
Registration Statement filed by General Mills, Inc. and previously declared
effective.

A written prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933 will be available from Citigroup (388 Greenwich Street,
32nd Floor, New York, NY 10013, tel [phone]), Merrill Lynch (Merrill Lynch
North Tower, New York, NY10081, tel [phone]), or Morgan Stanley (1585
Broadway, New York, NY 10036, tel [phone]).





- Ends -

Investor enquiries:

Catherine James [phone] or [e-mail]

Kelly Padgett [phone] or [e-mail]



Media enquiries:

Isabelle Thomas [phone] or [e-mail]





About Diageo plc

Diageo is the world's leading premium drinks business. With its global vision,
and local marketing focus, Diageo brings to consumers an outstanding collection
of beverage alcohol brands across the spirits, wine and beer categories
including Smirnoff, Guinness, Johnnie Walker, Baileys, J&B, Cuervo, Captain
Morgan and Tanqueray, and Beaulieu Vineyard and Sterling Vineyards wines. Diageo
trades in some 180 markets around the world and is listed on both the New York
Stock Exchange (DEO) and the London Stock Exchange (DGE). For more information
about Diageo, its people, brands and performance, visit us at www.diageo.com




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