Diageo opposes bid to block sale of EABL stake to Asahi in court
Diageo challenges court bid to halt sale of its EABL stake to Asahi, as distributor Bia Tosha argues the deal could undermine its long-running legal dispute.
KENYA – British multinational Diageo has opposed an application seeking to block its planned sale of a 65% stake in East African Breweries Limited (EABL) and its holding in UDV Kenya to Japan’s Asahi Group Holdings.
The proposed transaction, valued at approximately Kes 300 billion (US$2.31B), would see Asahi take full control of Diageo Kenya, the investment vehicle through which the British firm holds its EABL stake.
The deal also includes Diageo’s 53.68% shareholding in UDV Kenya, with EABL retaining the remaining stake and management control.
Diageo told the High Court that the transaction is being executed at the shareholder level and does not involve the sale of operating assets belonging to EABL, Kenya Breweries Limited (KBL), or UDV Kenya.
The company also argued that it should not be included in a case filed in 2016 by Bia Tosha Distributors Ltd against KBL, stating that attempts to involve it in the matter are misplaced.
“Ultimately, the Application is shown to be hollow, built on quicksand, and being a brazen attempt to over-reach and advance private commercial interests under the guise of constitutional litigation, ought to be rejected with costs,” Diageo submitted.
Diageo further said the application was an effort to “hoodwink the court” into interfering with a significant commercial transaction. It added that Bia Tosha should not be allowed to “weaponise” conservatory orders to derail the deal.
Bia Tosha, however, argued that Diageo’s exit from the Kenyan market could undermine its ongoing legal dispute over beer distribution rights. The company claims that KBL and UDV Kenya unlawfully terminated its distribution routes in 2016 and withheld a Kes 38 million (US$292.65M) goodwill refund.
The distributor maintains that if the transaction proceeds, it could make any eventual court ruling difficult to enforce. Anne-Marie Burugu, a director of Bia Tosha, said pursuing the matter in another jurisdiction would be impractical.
“Our business has in effect been destroyed; litigating in another jurisdiction would be adding salt to injury,” she said through her lawyers.
She added that the transaction is time-bound and irreversible once completed, noting that the company is seeking damages of Kes 25 billion (US$192.53M).
In response, Diageo maintained that it was not a party to the distributorship agreements at the center of the dispute. “It is worth reiterating that no Court has ever found Diageo to be in contempt,” the company said in its submission.
KBL, EABL and UDV Kenya also opposed the application, stating that granting the orders would adversely affect third parties not involved in the case.
The court is expected to deliver its ruling on April 9.
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