Kenya court clears path for Diageo EABL stake sale preparations

Kenya’s high court has allowed Diageo to continue preparations to sell its controlling stake in East African Breweries despite an ongoing trade dispute. The transaction, involving Japan’s Asahi, cannot be completed until a further hearing later this month.

Kenya’s High Court has ruled that preparations for Diageo’s sale of its controlling 65% stake in East African Breweries can proceed despite an action designed to prevent it from being lodged while a trade dispute is heard.

Legal challenge

Kenyan beer distributor Bia Tosha filed the case to try to block the deal pending resolution of litigation dating back to 2016, in which it claims that Diageo and EABL unfairly ended its contract.

The court moved the hearing of the case until January 20 but said Diageo and Asahi could continue preparations for the sale, such as seeking regulatory approvals, so long as it was not concluded before the next hearing.

Sale timeline and rationale

Both Diageo and Asahi have said they expect the transaction to be finalised in the second half of this year. It is part of Diageo’s programme of debt reduction by selling non-core and underperforming assets.

Company reaction

“We welcome the court’s decision to allow the regulatory phases of this transaction to continue,” EABL said in a statement. Previously, it has been said that Bia Tosha’s case has no legal or factual link to the transaction.

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