Kenya’s High Court has temporarily halted Diageo’s planned Sh340 billion sale of its 65 percent stake in East African Breweries Limited (EABL), along with its holding in spirits maker UDV Kenya, to Japan’s Asahi Group Holdings. The court issued conservatory orders stopping the completion, implementation, or transfer of Diageo’s controlling interest in EABL pending an inter partes hearing of the case.
The freeze follows a petition filed by Christine Irungu, who alleges that minority shareholders were denied material information when Diageo increased its stake in the brewer from about 50.03 percent to 65 percent through a 2022-2023 tender offer before pursuing a sale. The petition argues that if a sale was contemplated during or before that acquisition process, shareholders who sold into the tender offer may have been deprived of information necessary to assess the true value of their investments.
The case also draws Kenya’s market regulators into the dispute. The petition names Diageo Kenya Limited, Diageo Plc, EABL, Asahi Group Holdings, the Capital Markets Authority (CMA) and the Competition Authority of Kenya (CAK) as respondents, with the Law Society of Kenya joined as an interested party. Irungu claims the CMA failed to protect minority shareholders from a control premium created through Diageo’s tender offer, while the CAK failed to adequately assess the transaction’s effect on competition, consumers, distributors and the broader public interest.
This marks a notable shift from earlier challenges, including those from Bia Tosha and other parties, were dismissed because courts found no sufficient connection between the petitioners’ historical commercial disputes with EABL and the transfer of Diageo’s stake. The latest petition instead focuses directly on the share acquisition itself, investor disclosures, minority shareholder rights and the conduct of regulators who approved the process.
Before this petition, the deal was expected to close between July and December this year, having already secured regulatory approvals in Uganda and Tanzania while awaiting merger clearance in Kenya. The transaction is expected to generate roughly Sh42 billion in capital gains tax for the National Treasury. Under the deal, Asahi would take full control of Diageo Kenya Limited, the vehicle through which Diageo holds its EABL stake, as well as Diageo’s 53.68 percent holding in UDV Kenya.
No date has yet been confirmed for the full hearing, but the conservatory orders mean the transaction cannot be finalized until the court rules on the disclosure allegations.
