By John Pain
The Associated Press

MIAMI - British liquor company Diageo Plc agreed to sell its Burger King business for a reduced price of $1.5 billion to a U.S investment consortium in a deal that underscores the flagging fortunes of fast-food companies as they engage in a tough battle for fickle consumers.

The deal, announced early Friday, was about one-third less than the $2.26 billion price that the group agreed to pay in July for the Miami-based burger chain, the nation's second biggest after McDonald's Corp.

Buyers - Texas Pacific Group, Bain Capital and Goldman Sachs Capital Partners - balked at the original price in November amid weakening sales at Burger King.

Burger King has been under pressure from an industry price war that has hurt profits.

London-based Diageo has wanted to sell the fast-food chain since June 2000 so it can focus on its business as the world leader in alcoholic beverages. Diageo markets several popular liquor brands, including Johnnie Walker scotch and Smirnoff vodka, and brews Guinness stout.

After the initial deal broke down, Diageo continued talks with the U.S. consortium rather than seek other interested buyers.

Wall Street credit rating firms were concerned about the reduced price of the deal, which comes as Diageo faces a deteriorating market in its core liquor business. Standard & Poor's downgraded its ratings outlook for Diageo to negative from stable. Moody's said it was reviewing whether to reduce its ratings on Diageo debt.

One of the immediate challenges for the burger chain's buyers would be fending off competitive challenges to help stem its slide.

Analysts said the prolonged negotiations distracted Burger King management and franchisees.

No massive closing or expansion of restaurants is immediately planned, said Owen Blicksilver, a spokesman for the investment group. "The first priority is to make sure that the current operation is running efficiently," he said.