Diageo-Asahi deal faces pressure as minority shareholder seeks mandatory buyout for EABL investors
A Kenyan minority shareholder is pushing regulators to compel Asahi to offer equal buyout terms to all EABL investors amid mounting legal challenges to the Diageo deal.
KENYA – A minority shareholder in Diageo Plc’s Kenyan subsidiary has petitioned regulators to compel Asahi Group Holdings Ltd. to make a mandatory takeover offer to all East African Breweries Ltd. (EABL) shareholders, intensifying scrutiny over the US$2.3 billion transaction.
Shane Ngechu filed a request with the Capital Markets Authority (CMA), urging the regulator to require Asahi to extend the same terms agreed with Diageo to minority investors.
The petition, submitted through his lawyers, argues that all shareholders should benefit equally from the deal.
“Public interest is best served by ensuring that the 35% local float is treated with the same commercial equity as the departing majority shareholder,” Ngechu said in the letter seen by Bloomberg.
He further argued that without a mandatory offer, minority shareholders are disadvantaged. According to the filing, the absence of such an offer “is effectively denying minority shareholders the right to exit at the same 97% premium – about 590.78 shillings per share – that Diageo is receiving.”
Ngechu also called on Kenyan authorities to disclose measures taken to safeguard minority shareholder rights, citing the need for compliance with rules on equal treatment and protection of dissenting shareholders.
The petition adds to a growing list of legal challenges facing Diageo’s planned divestment. In January, beer distributor Bia Tosha moved to the High Court seeking to block the transaction, citing an unresolved legal dispute with Diageo’s Kenyan entities dating back to 2016.
The case involves EABL and its subsidiary, Kenya Breweries Ltd. (KBL), and centers on disagreements over a distribution contract.
In February, JILK Construction also sought to halt the sale, arguing that the transaction could undermine enforcement of a pending arbitral award linked to construction contracts with KBL.
The firm stated it entered into three agreements between October 2017 and March 2018 for civil works tied to the refurbishment of the Kisumu brewery under Project Nafasi.
JILK claims the works were completed and handed over, but disputes later emerged regarding payments and project execution. The company further alleged that Diageo exercised full control over the project, including supervision and financial decisions.
Diageo has maintained that the transaction is being executed at the shareholder level and does not involve the sale of operating assets owned by EABL, KBL, or UDV Kenya.
The company also rejected its inclusion in the Bia Tosha case, stating that it was not a party to the distributorship agreements.
“It is worth reiterating that no Court has ever found Diageo to be in contempt,” the company said in its submission.
The court is expected to deliver its ruling on April 9.
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