A court challenge in Kenya has introduced additional uncertainty into Diageo’s planned sale of its majority stake in East African Breweries Limited (EABL) to Asahi Group Holdings, potentially delaying one of the most significant beer transactions ever seen in East Africa. Kenyan beer distributor Bia Tosha has filed an urgent case at Kenya’s High Court seeking to pause the USD 2.3bn deal until a long-running competition dispute involving Diageo, EABL and Kenya Breweries Limited is fully resolved.
The High Court initially certified the application as urgent and issued a temporary preservation order that restrains only the final steps of the transaction. In a subsequent procedural update, the court postponed the substantive hearing to January 20, while allowing both Diageo and Asahi to continue pursuing regulatory approvals. The interim ruling is therefore seen as a delay rather than a suspension of the transaction.
EABL has rejected any connection between the distributor’s claims and the proposed sale, stating that EABL and KBL remain fully capable of conducting business and defending any litigation regardless of a change in majority shareholder. Diageo has declined to comment publicly on the court proceedings.
Under the agreed terms, Diageo plans to sell its 65% stake in EABL and its shareholding in UDV Kenya, valuing EABL at approximately USD 4.8bn. Once completed, the transaction would mean Diageo no longer holds any direct equity stake in the African beer business, although production and distribution of key brands are expected to continue under long-term licensing and transitional service agreements (inside.beer, 18.12.2025).
The disposal forms part of Diageo’s broader strategy to reduce debt and streamline its portfolio, following weaker sales performance, shifting consumer demand and wider geopolitical pressures, including U.S. tariffs. For Asahi, the deal represents its first direct investment in Africa and a strategic entry into beer markets such as Kenya, Uganda and Tanzania, supported by strong local brands and established production infrastructure.
While the legal process introduces timing uncertainty, the court has so far signalled that regulatory work may proceed in parallel, suggesting that the strategic rationale of the transaction remains intact despite the challenge.
