End of an era: UK drinks giant Diageo set to exit Kenya, sells EABL stake for Sh297b

Asahi Group President and Group CEO Atsushi Katsuki and EABL Group MD Jane Karuku after a meeting with EABL staff shortly after the announcement that Asahi Group has bought Diageo PLC's shares in the company. [Courtesy]

British drinks giant Diageo Plc has agreed to sell its controlling stake in East African Breweries Ltd to Japan's largest beer company Asahi Group Holdings in a deal worth $2.3 billion (Sh297 billion), marking the end of a decades-long presence for the spirits group in Kenya.

The London-based group said in a statement, on Wednesday, it has agreed to sell its stake in its Kenyan business as it looks to reduce its debt load through divestments.

The London-listed owner of brands including Johnnie Walker and Smirnoff will sell its 65 per cent stake in East African Breweries Limited (EABL) to Asahi Group but will keep a foothold in the market through a licensing agreement with EABL.

The transaction values the Nairobi-listed EABL at $4.8 billion (Sh621 billion) and will reduce Diageo's net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) ratio by approximately 0.25 times.

In the 12 months to June, EABL reported net sales of $996 million (Sh128.8 billion) and net debt of $229 million (Sh29.6 billion).

Earlier this year Nik Jhangiani, Diageo's interim chief executive, said the company was planning significant divestments to help reduce its debt burden. The drinks maker has been hit by falling alcohol demand and US President Donald Trump's trade tariffs.

In a statement on Wednesday, Jhangiani said: "This transaction delivers both significant value for Diageo shareholders and accelerates our commitment to strengthen our balance sheet."

Asahi will pay approximately $3 billion (Sh388 billion) in total, acquiring Diageo's 100 per cent stake in Diageo Kenya for $2.35 billion (Sh304 billion) and a 53.8 per cent stake in UDVK, Diageo's local distiller, for $646 million (Sh83.5 billion).

These combined interests constitute the 65 per cent holding in EABL. After tax and deal costs, Diageo will receive $2.3 billion (Sh297 billion).

The Japanese group, which is recovering from a cyber attack, said it expects EABL to remain listed on the Kenyan, Ugandan and Tanzanian stock exchanges upon completion.

Asahi stated the acquisition provides "a leading platform in Kenya and the east African market, which is expected to deliver long-term growth driven by population increase and economic expansion."

The company highlighted EABL's "rich brand portfolio, including beer brands such as Senator, Chrome and Kenya Cane". The parties also plan to enter long-term licences for Diageo's global brands, such as Guinness and Smirnoff Ice, allowing Diageo to retain brand presence.

The deal concludes Diageo's direct ownership of a major African beer production asset.

The group has been offloading these assets while retaining licensing agreements to reduce exposure to currency volatility and boost margins. It sold its Ethiopia and Cameroon businesses in 2022, Nigeria in 2024 and Ghana in January 2025.

EABL, previously state-owned, is Kenya's largest drinks company, commanding roughly 80 per cent of the alcohol market. It brews local beers like Tusker and Serengeti for Kenya, Uganda, and Tanzania, and distributes Diageo's spirit brands regionally.

In a cautionary announcement dated Dec. 17, EABL's board confirmed receipt of Diageo's notification of the imminent sale. The notice stated that Asahi intends to seek an exemption from mandatory takeover offer rules for the remaining 35 per cent of publicly traded shares.

Following the announcement, the Nairobi Securities Exchange (NSE) halted trading in EABL shares for the remainder of Wednesday to "promote orderly trading and ensure equitable access to information." Trading is set to resume on the next trading day.

The exit comes as EABL shows resilient performance. For the year ended June 30, the brewer reported a 12 per cent rise in profit after tax to Sh12.2 billion, on net sales of Sh128.8 billion, declaring a total dividend of Sh8.00 per share.

The transaction is subject to regulatory approvals in multiple jurisdictions including Kenya.