Kenya: High Court temporarily halts completion of Diageo’s EABL sale to Asahi

Kenya’s High Court has temporarily halted the completion of Diageo’s proposed sale of its controlling stake in East African Breweries (EABL) to Japan’s Asahi Group Holdings, pending ongoing regulatory and legal proceedings, Food Business Middle East & Africa reported on September 3.

Justice Francis Gikonyo ruled that EABL’s ownership and control as of June 18, 2026, must remain unchanged until an appeal before the Capital Markets Tribunal is determined and the Competition Authority of Kenya (CAK) completes its review of the transaction.

The case was filed by Christine Irungu, who has challenged the proposed transaction over disclosure of information, protection of minority shareholders and the role of market regulators.

A central issue is Diageo’s decision to increase its stake in EABL from about 50% to approximately 65% through a 2022-2023 tender offer before agreeing to sell its controlling interest to Asahi.

Irungu has questioned whether the earlier acquisition increased Diageo’s controlling stake ahead of the proposed sale and whether minority shareholders received adequate information.

“The petition raises constitutional issues including violation of specified constitutional provisions, rights and guarantees as well as exercise of mandates by statutory authorities concerned,” the court said.

Diageo, EABL and Asahi opposed the application, arguing that the matters should primarily be addressed through specialised regulatory bodies and tribunals established under Kenya’s capital markets and competition laws.

They also argued that stopping the transaction could affect investor confidence and Kenya’s attractiveness as an investment destination.

CAK separately argued that the High Court should not determine the case before available regulatory appeal mechanisms had been exhausted.

The High Court, however, found that the dispute involved multiple institutions and raised broader constitutional questions that could not be fully addressed by a single regulatory body.

The court also noted that CAK was still reviewing the transaction and had not issued a decision that could be challenged before the Competition Tribunal.

Meanwhile, the Capital Markets Tribunal is considering an appeal by EABL minority shareholders against the Capital Markets Authority’s decision to exempt Asahi from making a mandatory takeover offer.

Justice Gikonyo said allowing the transaction to proceed before the regulatory and legal processes were completed could undermine the ongoing proceedings.

The latest order follows earlier attempts to halt the transaction. Bia Tosha, a beer distributor involved in a separate dispute with Diageo dating to 2016, previously sought to freeze the sale. The High Court dismissed its application in April, allowing the transaction to proceed.

Further challenges followed, including one by a construction firm and other litigants. By June, Irungu’s petition had resulted in orders freezing EABL’s ownership structure.

EABL reported a 49% increase in net profit to KES 18.2 billion (US$140.7 million) for financial year 2026, supported by sales growth, cost management and lower financing costs.

04 September, 2026