Kenya’s High Court has dismissed a bid to block Diageo’s $2.3 billion sale of East African Breweries Limited to Japan’s Asahi Group Holdings, clearing one of the last legal obstacles to what ranks among the largest corporate transactions in the country’s history.
Judge Bahati Mwamuye threw out the application on Thursday, lifting all orders that could have impeded completion of the deal. “The petitioner’s notice of motion dated 5th January 2026 is hereby dismissed,” she ruled.
What the Deal Involves
Diageo agreed in December 2025 to sell its 65% stake in EABL to Asahi as part of a wider strategy to cut debt and revive growth under new CEO Dave Lewis. The deal, valued at approximately Ksh 300 billion, transfers Diageo Kenya Limited — the investment vehicle holding the EABL stake — to the Tokyo-based brewer.
Asahi will also acquire Diageo’s 53.68% shareholding in UDV Kenya, with EABL retaining the remaining stake and operational control. Once the transaction closes, Asahi becomes EABL’s largest shareholder. The parties expect to complete the deal in the second half of 2026.
The Legal Challenge
Beer distributor Bia Tosha filed a petition in January seeking to halt the sale, citing a legal dispute with Diageo dating back to 2016. The distributor argued that Diageo’s exit from Kenya would leave it chasing a foreign company in British courts if it won its Ksh 25 billion damages claim — effectively stranding any court order it might obtain.
The roots of the dispute stretch further back. A 2000 agreement granted Bia Tosha distribution rights across parts of Nairobi and Kajiado, for which it paid Ksh 27.3 million in goodwill. When Kenya Breweries Limited later repossessed and reassigned some of those territories, Bia Tosha sought a refund. KBL maintained the payments were non-refundable and the agreement non-exclusive. The case has wound through multiple courts since 2016, including a Court of Appeal referral to arbitration and a Supreme Court decision reinstating High Court proceedings.
Diageo and EABL opposed the application, telling the court that blocking the transaction would fracture a supply chain supporting thousands of jobs across Kenya and the wider East African region — touching distributors, retailers, hospitality businesses, farmers, and suppliers. Diageo went further, describing the application as an attempt to use private commercial litigation to derail a nationally significant transaction.
Why the Outcome Matters
The ruling carries weight beyond the two companies involved. Kenyan government officials have publicly said the deal’s success signals to foreign investors that large transactions can close cleanly in the country. A failed deal, they warned, would send the wrong message at a time when Kenya is actively courting capital to grow its industrial sector and create jobs.
For Asahi, EABL offers something it has been looking for: a foothold in Africa to anchor its global expansion. The group’s CEO Atsushi Katsuki pointed to EABL’s brand portfolio, marketing infrastructure, and production capacity when the deal was first announced.
EABL welcomed the ruling and said it would continue to contest the underlying dispute on its merits. Lawyers for Bia Tosha did not comment.
