Diageo’s EABL deal faces legal challenge in Kenya

The US$2.3bn sale of Diageo’s controlling stake in East African Breweries has been thrown into uncertainty after a distributor sought a court injunction. Kenya’s High Court is treating the matter as urgent, with hearings set to begin immediately.

Diageo’s agreed sale of its US$2.3 billion controlling stake in East African Breweries to Asahi is being challenged over a trade wrangle.

Local distributor Bia Tosh has asked the High Court in Nairobi to stop the sale proceeding until its outstanding litigation against Diageo, EABL and its Kenyan subsidiary KBL over a competition dispute is settled.

Deal part of Diageo’s debt reduction strategy

Diageo, the world’s biggest spirits group, said last month it had agreed a deal with the Japanese brewer for the sale of its 65% stake in East African Breweries Limited as it looks to sell underperforming assets and reduce debt.

Kenya’s High Court is regarding the case as urgent and will start its hearing tomorrow.

The long-running dispute dates back to 2016

The dispute dates back to 2016 when Diageo declined to renew a contract with Bia Tosh.

In a statement, EABL said the case brought by Bia Tosha has no factual or legal links to the transaction.

“Regardless of the change of majority shareholder, EABL and KBL remain independent, capable entities fully able to conduct their business and defend any litigation,” it said.

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