NEW YORK (CNNfn) - Federal regulators are looking at many different options to clear General Mills Inc.'s $10.5 billion buy of Pillsbury, including splitting up custody of the cultural icon, the Pillsbury Doughboy, a source familiar with the situation told CNNfn.com.|
The Federal Trade Commission is also considering making General Mills give up the Doughboy completely. Another scenario would call for General Mills to sell more products to International Multifoods as well as split up use of the icon, the source said.
However, regulators are not leaning more to any one solution over the other, the source said.
Last summer, Minneapolis-based General Mills (GIS: down $0.76 to $43.70, Research, Estimates) agreed to buy Diageo PLC's Pillsbury unit, turning the U.S. company into the world's fifth-largest food maker. The deal combines Pillsbury's Doughboy refrigerated products, Haagen-Dazs ice cream and Old El Paso Mexican food with General Mills' Cheerios and other breakfast cereals, Yoplait and Colombo yogurts, and Betty Crocker cake mixes.
The Doughboy first appeared in Pillsbury advertisements in 1965, featuring the 8-3/4 inch tall dough character wearing a baker's hat and scarf. The doughboy has weathered many different musical styles and at one point even rapped, "Give me the beat and I'll help you bake a treat." (He also weighs only 14 ounces and has blue eyes, according to the official doughboy.com Web site.)
In February, General Mills sold the Pillsbury Co.'s desserts and specialty products business and Robin Hood flour brand to International Multifoods for $305 million in a bid to ease regulatory concerns.
As part of the sale, both companies would use the Doughboy to advertise its products. International Multifoods would use the squishy character to market Pillsbury cakes and cookies, while General Mills would use him to advertise refrigerated tubes of cookie dough and sweet rolls.
But regulators are concerned that splitting the Doughboy brand would diminish competition. If two companies split the Doughboy, customers would still associate him with Pillsbury, the source said.
Diageo could not be reached for comment. General Mills and International Multifoods could not be reached after repeated attempts.
"The matter is still under consideration by the FTC and no decision has been reached," an FTC spokeswoman said.