Kenyan court clears path for Diageo’s US$2.3bn EABL sale
A Kenyan High Court ruling has removed a key legal obstacle to Diageo’s planned sale of its controlling stake in East African Breweries to Asahi. The decision allows the drinks giant to proceed with a major disposal as part of its wider debt reduction strategy.
The potential legal obstacle to Diageo selling its controlling 65% stake in East African Breweries (EABL) to Asahi of Japan has been removed by a Kenyan court.
The Nairobi court has dismissed a bid to halt the $2.3 billion transaction brought by Kenyan beer distributor Bia Tosha which demanded that a case first brought in 2016 over a distribution deal be settled with EABL before Diageo could proceed.
Ruling clears way for completion
The sale, which is now expected to be completed in the second half of this year, was announced in December and is part of Diageo’s strategy to ease its debts and revive growth by disposing of non-core assets.
“The petitioner’s notice of motion dated 5th January 2026 is hereby dismissed,” said Bahati Mwamuye, a High Court judge, adding that any other orders that might impede the completion of the deal were lifted.
EABL welcomed the ruling and said it would prove its case in the ongoing litigation which is based on Bia Tosha’s allegation that it suffered unfair termination of distribution rights.
Part of broader disposal strategy
The sale of the EABL holding, which is now expected to be completed in the second half of this year, was announced in December and is part of Diageo’s strategy to ease its debts and revive growth by disposing of non-core assets.
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The world’s biggest spirits group has also agreed to sell its controlling stake in the Indian Premier League cricket champions Royal Challengers Bangalore for almost $1.8 billion.
Strategic reset under new leadership
Meanwhile, new chief executive Sir Dave Lewis is drawing up his strategy for renewal which he intends to unveil to shareholders next month.
He has already indicated that it will include a rigorous review of the entire portfolio and be geared to concentrating much more directly on the demands of both stockists and consumers.
There is also speculation that he may reduce some prices at the cost of margins in a drive to increase sales and boost cash flow.
Industry consolidation adds complexity
Meanwhile, his calculations may have been clouded by the ongoing merger talks between Jack Daniel’s owner Brown-Forman and Pernod Ricard to form a $30 billion main rival.
Those discussions themselves have been disrupted by Sazerac approaching Brown-Forman to create a group that would hold 40% of the market for American whiskey through a portfolio including Jack Daniel’s, Old Forester, Woodford Reserve, Buffalo Trace and Fireball Cinnamon.
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