Diageo cleared to sell Burger King
last remaining food-related business, leaving the UK group free to
strengthen its position as the world's leading spirits and wine
producer.
Diageo, the world's largest producer of spirits and wine, has finally completed the sale of all its non-drinks business. After the sale of the Pillsbury food arm in 2001 the company has now overcome the final hurdle in its proposed sale of the Burger King fast food chain - approval by the European Commission.
The Brussels authorities said that they had cleared the sale of Burger King to US investors TPG Advisors, Goldman Sachs and Bain Capital Fund despite the fact that the acquisition would mean the same company owning both the burger chain and Domino's Pizza.
"[Burger King] will continue to face competition from a wide range of rival food chains," the Commission said in a statement
Bain Capital has a major stake in Domino's Pizza, the home delivery pizza chain, and the BK and Domino's businesses overlap in a number of European countries: Denmark, Germany, Ireland, the Netherlands, Spain and the United Kingdom.
But the Commission said that the combined share of the two chains in all these markets was less than 15 per cent, and that there was sufficient competition from other companies such as McDonald's, Quick, KFC and Pizza Hut to allow the deal to go ahead.
The US Antitrust authorities gave their approval for the sale on 19 August, which means that all the regulatory hurdles have now been overcome and Diageo can proceed with the $2.26 billion (€2.29bn) sale. Completion is expected by the end of the year, and a substantial part of the proceeds from the sale is likely to be paid back to shareholders, in line with Diageo's recent policy.
