Drinks group Diageo has confirmed it will sell its Burger King chain of fast-food outlets to a US consortium.

The fast-food chain is being sold for $2.26bn to a group made up of US venture capitalist firms Texas Pacific and Bain Capital, together with private equity group Goldman Sachs Capital Partners.

The sale had been anticipated after Diageo announced in March it was reviewing the options for Burger King as part of a strategy to focus on its drinks business.

Diageo is the world's largest drinks group with a portfolio that includes Johnny Walker whisky, Smirnoff vodka and Bailey's Irish Cream liqueur.

Burger King is now the number two fast-food chain in the world with over 11,000 Burger King outlets across the world, the majority of which are run as franchises. The sale is dependent on the chain meeting certain sales targets in its financial year to 30 June 2002.

Market joy

Diageo says it will use the proceeds to invest in its drinks business and return some cash to shareholders.

The group disappointed investors earlier this month when it reported that sales in its top six drinks brands had slowed in the first half of 2002.

On Thursday, Diageo finance director Nick Rose said he expected to return a "substantial proportion" of the sale proceeds to its investors.

There will be a tax cost of $175m on the deal, which is expected to be completed by the end of the current year.

The market welcomed news of the sale with shares up 5% or 35 pence to 716p. This gives the group a market value of �23bn.