High Court again halts Diageo’s US$2.6B EABL stake sale to Asahi Group 

KENYA – The High Court of Kenya has temporarily halted the KES 340 billion (US$ sale of British drinks giant Diageo’s 65 percent stake in East African Breweries Limited (EABL) and its holding in UDV Kenya to Japan’s Asahi Group Holdings. 

The conservatory orders follow a petition filed by Christine Irungu, who alleges that minority shareholders were denied material information when Diageo increased its stake in EABL from about 50.03 percent to 65 percent through a tender offer conducted in 2022 and 2023 before pursuing a sale. 

The legal challenge has placed the Capital Markets Authority (CMA) and the Competition Authority of Kenya (CAK) under renewed scrutiny over investor protection and market transparency. 

The court ordered the suspension of the completion, implementation and transfer of Diageo’s controlling interest in EABL pending an inter partes hearing of the case. 

The judge also directed that the current ownership and shareholding structure in EABL be preserved and ordered the respondents to file their responses within seven days. 

According to the petition, CMA failed to protect minority shareholders from a control premium created through Diageo’s tender offer, while CAK failed to adequately evaluate the impact of the transaction on competition, consumers, distributors and public interest. 

Irungu argues that Diageo’s acquisition of additional shares was presented to investors and regulators as a long-term investment intended to strengthen its partnership with EABL and demonstrate confidence in East Africa’s growth prospects. 

The ruling disrupts Diageo’s plans to complete the sale of its controlling stake to Asahi Group between July and December 2026. The transaction is expected to generate KES 42 billion in capital gains tax for the National Treasury. 

Asahi would also acquire Diageo’s 53.68 percent stake in UDV Kenya. EABL owns the remaining shares and maintains management control of the spirits business. 

Before the court intervention, the transaction had secured regulatory approvals in Uganda and Tanzania and was awaiting merger clearance in Kenya. 

The petitioner claims the subsequent decision to sell the enlarged stake raises questions over whether investors received full disclosure when the tender offer was undertaken. 

“The impermissible purchase and sale of its shares by the first (Diageo Kenya) and second respondent (Diageo Plc) accrued an impermissible advantage to the first and second Respondent in circumstances that have led to the taking of property of the 15 percent shareholders who were duped into selling their shares in the tender offer,” the petition states. 

Irungu is seeking declarations that the transaction raises constitutional and public-interest concerns, disclosure of transaction documents and fresh reviews by CMA and CAK. 

The High Court is scheduled to mention the matter on July 2. In recent weeks, separate attempts by Nairobi beer distributor Bia Tosha Distributors and contractor JILK Construction Company to block the transaction were dismissed after judges ruled that their commercial disputes with EABL could still be determined even if the sale proceeded. 

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