Kenyan beer distributor disputes Diageo’s $2.3 billion sale of EABL in court

Kenya’s High Court will hear a case this week that could slow Diageo’s plan to sell its stake in East African Breweries (EABL) to Japan’s Asahi Group. The $2.3 billion deal would mark Diageo’s full exit from Africa’s beer market after nearly three decades of operations.

The petition was filed by local distributor Bia Tosha, which wants the court to halt the sale until its separate competition dispute with Diageo, EABL, and Kenya Breweries Limited (KBL) is resolved. According to Reuters, the court has certified the matter as urgent and set a hearing for Friday to determine next steps.

A $4.8 billion handover with old ties

If completed, the transaction would value EABL at roughly $4.8 billion and transfer Diageo’s 65% stake to Asahi. The move continues Diageo’s gradual shift away from beer toward premium spirits, following earlier portfolio changes in Asia and Latin America.

EABL, listed on the Nairobi Securities Exchange, said through a statement reported by Reuters that the ongoing litigation has “no factual or legal links to the transaction.” It added that “regardless of the change of majority shareholder, EABL and KBL remain independent, capable entities fully able to conduct their business and defend any litigation.”

Investor reactions tell a mixed story 

Shares in Diageo (LSE: DGE) rose 1.65% to 1,661 pence on Tuesday after RBC Capital Markets upgraded the stock to outperform. The bounce followed months of weakness that saw the shares fall from a 52-week high of 2,567 pence to near 1,580 pence.

EABL’s Nairobi-traded shares edged down 0.5% after news of the Kenyan challenge. Analysts say investor sentiment remains cautious until the legal process becomes clearer.

Old friction returns to Kenya’s beer market

The court fight adds to a pattern of commercial disputes in Kenya’s beer distribution network. Similar cases in past years have delayed partnerships and licensing renewals for multinational brewers.

For Diageo, the timing is sensitive. The company cut its fiscal 2026 outlook in late 2025, citing softer U.S. demand and slower recovery in China. The EABL sale, agreed in December 2025, fits into a wider effort to simplify operations and concentrate on core spirits brands like Johnnie Walker, Smirnoff, and Baileys.

Asahi, meanwhile, is looking to expand outside Japan as domestic consumption flattens. Buying into EABL gives it a ready-made presence across Kenya, Uganda, and Tanzania, where EABL dominates regional beer sales.

What comes next

Kenya’s High Court is expected to issue directions on Friday. The hearing will determine whether the case proceeds to a full trial or runs alongside regulatory reviews already underway in Kenya and other markets where EABL operates.

Analysts say any delay could affect the timing of Diageo’s exit and create short-term uncertainty for distributors and investors tracking the transition. The outcome will also signal how Kenyan courts weigh competition disputes against major cross-border deals—a test that could influence future mergers in the region’s fast-growing consumer goods sector.