Diageo is ready to sell the majority of its $3.5bn (£2bn) shareholding in General Mills, to maintain its focus on its drinks businesses.

The manufacturer of Smirnoff vodka and Guinness acquired a 21% stake in General mills in 2001 after it sold its Pilsbury food division to the US company.

Most of Diageo’s shareholding will be sold via an underwritten public offer, although General Mills will buy back 16.5 million direct from Diageo, according to newspaper reports.

General Mills has agreed to sell an $835m stake in its cereal business to Lehman Brothers in order to free up the money to repurchase the shares from Diageo.