Updated from 8:19 a.m. EDT

British food and beverage company

Diageo

(DEO) - Get Report

is in talks to merge its U.S. food division,

Pillsbury

, with

General Mills

(GIS) - Get Report

, the companies said Thursday.

Diageo confirmed news reports of the discussions in a statement to the

London Stock Exchange

Thursday: "The directors of Diageo have noted the speculation regarding a possible combination of Pillsbury with General Mills. Diageo and General Mills are engaged in discussions concerning a potential business combination with Pillsbury. There is no certainty that these discussions will lead to a transaction."

General Mills released a similar statement later Thursday, confirming the talks but offering little more. "General Mills does not intend to make any additional comments unless and until an agreement has been reached," it said.

The Wall Street Journal

, citing people familiar with the situation, said the companies are weighing a merger valued at about $11 billion.

The report cautioned that other bidders, such as

H.J. Heinz

(HNZ)

, could emerge as potential buyers of Pillsbury.

Pillsbury makes such brands as Haagen-Dazs ice cream and Green Giant frozen foods, while General Mills produces brands such as Cheerios cereal and Betty Crocker cake mixes. Both companies are based in Minneapolis.

Ann Gurkin, an analyst at

Davenport & Co.

who covers General Mills, said the proposed deal would allow General Mills to realize its ambition of becoming more than a cereal company. "General Mills seems to be moving in the direction of becoming a broad food company," she said. Gurkin has a buy rating on General Mills and her firm does not offer banking services.

The deal would allow Diageo to concentrate on its more profitable beverage divisions, while still maintaining a presence in the U.S. food market.

The market was relatively unswayed by the news. Diageo's American Depositary Receipts, which are equal to four common shares, were down 3/4, or 2%, at 36 1/8 on the

New York Stock Exchange

in midday trading. General Mills, meanwhile, was up 1/4, or 1%, to 37.