(Nairobi, Kenya) – The High Court has temporarily halted the Sh340 billion sale of British multinational Diageo’s entire 65 percent stake in East African Breweries Limited and its holding in spirits maker UDV Kenya to Japanese beverage firm Asahi Group Holdings. At current exchange rates, the transaction is valued at approximately $2.6 billion.
The freeze follows a petition 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 to 2023 tender offer before pursuing a sale. The legal challenge places the Capital Markets Authority and Competition Authority of Kenya under renewed scrutiny over investor protection and market transparency.
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 judge also ordered preservation of the current ownership and shareholding structure in EABL and directed the respondents to file responses within seven days.
The petition names Diageo Kenya Limited, Diageo Plc, EABL, Asahi Group Holdings, CMA and CAK as respondents. The Law Society of Kenya is named as an interested party in the suit. Ms Irungu alleges that CMA failed to protect minority shareholders from a control premium created through Diageo’s tender offer, while CAK failed to adequately assess the transaction’s impact on competition, consumers, distributors and the wider public interest.
She argues that Diageo’s acquisition of additional EABL shares was presented to investors and regulators as a long term investment aimed at strengthening its partnership with the brewer and demonstrating confidence in East Africa’s growth prospects. The court’s decision halts Diageo’s momentum to complete the sale of its 65 percent stake to Japan’s Asahi Group between July and December 2026, with the National Treasury expected to receive Sh42 billion, or about $321 million, in capital gains tax.
In the Sh340 billion deal, Asahi would take full control of Diageo Kenya Limited, the investment vehicle through which the British firm holds the EABL stake. The Japanese firm would also take ownership of Diageo’s 53.68 percent holding in UDV Kenya. EABL owns the remaining UDV Kenya stake and also has management control of the unit.
Before the latest court intervention, the deal was expected to close between July and December this year after receiving regulatory approvals in Uganda and Tanzania and while awaiting merger clearance in Kenya. The petitioner claims the subsequent decision to sell the enlarged stake to Asahi raises questions about whether investors received full disclosure of material information when the tender offer was undertaken.
The petitioner contends that if a sale was contemplated during or before the acquisition process, shareholders who sold into the tender offer may have been deprived of information necessary to assess the value of their investments. She further argues that regulators failed to adequately investigate whether the acquisition of additional shares was connected to an intended onward sale and failed to impose safeguards to protect minority investors.
The petition states that the purchase and sale of shares by Diageo Kenya and Diageo Plc created an advantage for the two companies in circumstances that led to the taking of property of the 15 percent shareholders who were persuaded into selling their shares in the tender offer. The petition seeks declarations that the transaction raises constitutional and public interest questions, orders compelling disclosure of sale documents and fresh regulatory reviews by CMA and CAK.
She also seeks orders requiring CMA and CAK to conduct fresh reviews of the transaction and assess whether shareholders who sold into the tender offer were disadvantaged by any undisclosed information. The High Court is scheduled to mention the case for further directions on July 2.
In recent weeks, the High Court dismissed separate attempts by Nairobi beer distributor Bia Tosha Distributors and contractor JILK Construction Company to stop the transaction. In those cases, judges found no sufficient connection between the petitioners’ historical commercial disputes with EABL and the proposed transfer of Diageo’s stake. The courts held that the underlying claims could still be determined even if the transaction proceeded.
The latest petition takes a different approach by focusing directly on the share acquisition, investor disclosures, minority shareholder rights and the role of regulators in approving and overseeing the transaction.