PepsiCo Buys Out GM in Joint Venture

NEW YORK - Dec 13/04 - SNS -- PepsiCo will buy out General Mills' position in their Snack Ventures Europe (SVE) joint venture.

PepsiCo will pay $750 million for General Mills' 40.5% ownership interest. The redemption will end the Snack Ventures Europe joint venture, and its operations will become wholly owned by PepsiCo. The transaction is expected to be completed in early calendar 2005.

Snack Ventures Europe was established in July 1992 by combining General Mills' savory snack and sweet biscuit businesses in France, Belgium and The Netherlands with PepsiCo's salty and sweet snack businesses in Spain, Portugal and Greece. The venture is continental Europe's largest snack food company, with annual sales of more than $1 billion. Products marketed by SVE include: 3-Ds, Bugles, Doritos, Fritos, Hamka's, Lay's, Ruffles and Dippas.

General Mills intends to use after-tax proceeds from this transaction to reduce debt. As a result, the company now expects to significantly exceed its $675 million debt reduction target for fiscal 2005.

General Mills also said that it expects its 2005 net earnings per share to include a gain from the redemption of its interest in SVE. Excluding this one-time gain, General Mills reaffirmed its 2005 earnings target of $2.75 to $2.80 per share.