Compiled ByLisa Hofmann UK-based food and beverage concern Diageo PLC announced that it will merge its U.S.-based Pillsbury Co. with rival General Mills Inc. The $10.5-billion cash and stock deal will create one of the world's biggest food groups and follows the trend of consolidation in the industry. An agreement between the two companies combines brands such as Pillsbury's Old El Paso and Green Giant frozen foods with General Mills' Cheerios breakfast cereals and Betty Crocker mixes. Analysts in the U.S. have long speculated about the future of General Mills, which returned better-than-expected fourth-quarter earnings of $109 million last month. The company was being urged by analysts to complete a deal in order to fortify its stock price. Maintaining a 33% stake in the enlarged General Mills, Diageo will benefit from the enhanced growth and new General Mills shareholder values. The merger enables Diageo, which is the group behind UDV spirits and Guinness brewing, to concentrate on expanding its consumer beverage alcohol lines. "Our integrated spirits, wines, and beers platform will provide consumers with a spectrum of products for today's drinking occasions and produce revenue benefits and cost savings for Diageo," says Diageo CEO John McGrath. The decision to merge comes in the midst of a flurry of food industry mergers, a trend expected to continue. Anglo-Dutch consumer-products conglomerate Unilever's acquisition of New Jersey-based Bestfoods -- maker of Skippy peanut butter and Hellmann's mayonnaise -- will conclude in fourth quarter, creating a $52 billion dollar company. Philip Morris Companies Inc., owner of Kraft Foods, signed a deal estimated at $15 billion to acquire food giant Nabisco Holding Corp.