Court Decision Paves Way For Completion Of Diageo EABL Stake Sale In One Of Kenya’s Largest Deals

Beer bottles pass through a conveyor belt along a production line at the East African Breweries' microbrewery as the company released its half-year results in Ruaraka, Nairobi, Kenya, 26 January 2024. Reuters/Monicah Mwangi

London-listed Diageo, maker of Johnnie Walker whisky and Captain Morgan rum, said in December it had agreed to sell its 65% stake in EABL to the Japanese brewer, as it implements a turnaround strategy to reduce debt and revive growth.

But the deal soon ran into uncertainty after Kenyan beer distributor Bia Tosha petitioned the High Court to block the deal in January over pending litigation dating back to 2016.

The court rejected the bid, paving the way for the completion of the deal, which is set to be one of the country's biggest such transactions.

"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 could impede the completion of the deal were all lifted.

EABL welcomed the ruling and pledged to prove its case in the underlying dispute, which revolves around a claim of unfair termination of distribution rights.

Lawyers for Bia Tosha did not comment.

Diageo seeks turnaround under new management

Diageo's sale of assets such as EABL is seen as key to the group's strategy under new CEO Dave Lewis after years of stagnant or falling sales and growing investor unease.

The firm also faces tariff-related uncertainty, fragile global consumer sentiment, and evolving drinking preferences among some consumers.

The completion of the deal is also important to the Kenyan government, which is seeking to attract foreign investors in order to boost its industrial sector and create jobs, government officials have said, since failure would send the wrong signal.

Meanwhile, Asahi has been hunting for opportunities in markets including Africa and South America as it implements its global expansion strategy.

The Tokyo-headquartered group sees EABL as offering an attractive portfolio of brands, marketing capabilities and production facilities, its chief executive Atsushi Katsuki said when the deal was announced.

The parties expect the deal to be completed in the second half of this year.