Diageo to sell 65% East African Breweries stake to Asahi in Japan’s biggest-ever entry into Africa’s alcoholic beverages market

…Nairobi Securities Exchange halts trading for East African Breweries after announcement

Diageo Plc, a British multinational alcoholic beverage firm, has agreed to sell its 65 percent shareholding in East African Breweries Plc (EABL) to Japan’s Asahi Group Holdings in a landmark transaction that reshapes ownership of the region’s largest brewing group and marks the biggest-ever entry by a Japanese brewer into Africa’s alcoholic beverages market.

The deal, announced in a statement on Wednesday, will see the British multinational dispose of its entire 100 percent ownership in Diageo Kenya Limited, which holds a 65 percent stake in EABL, alongside its 53.68 percent direct stake in UDV Kenya Limited (UDVK), a Kenya-based spirits producer and importer.

EABL owns the remaining 46.32 percent of UDVK, retains management control and fully consolidates the business.

Diageo said the disposal is consistent with its strategy of selective sales of non-core assets aimed at strengthening its balance sheet and accelerating deleveraging.

Estimated net proceeds after tax and transaction costs are expected to amount to $2.3 billion, equating to a multiple of 17 times adjusted EBITDA and implying an enterprise value of $4.8 billion for 100 percent of EABL. The transaction is expected to reduce Diageo’s leverage by approximately 0.25x.

“The acquisition of EABL represents the first time a major Japanese brewing business has made an investment of this size in an African alcohol beverage business,” the company said. “Asahi is a strong, responsible, and experienced steward for the next phase of growth for EABL.”

The deal represents a strategic shift by Diageo away from direct asset ownership in East Africa, while marking a historic entry into the African market for Asahi. Subject to regulatory approvals, completion is expected in the second half of calendar year 2026. EABL will remain listed on the Nairobi Securities Exchange as well as stock exchanges in Uganda and Tanzania.

Nik Jhangiani, interim CEO of Diageo, noted that the group was proud of EABL’s achievements across East Africa, describing the business as the largest beer platform in the region built through a deep understanding of consumers and communities.

“This transaction delivers significant value for Diageo shareholders and accelerates our commitment to strengthen our balance sheet,” Jhangiani said, adding that the disposal supports Diageo’s target leverage range of 2.5x to 3.0x.

EABL is the largest beer business in East Africa, with operations spanning Kenya, Uganda and Tanzania and a heritage dating back more than a century. Under Diageo’s ownership, the brewer has delivered a strong growth track record, supported by state-of-the-art production facilities, an experienced board and management team, and deep relationships across its core markets.

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Asahi, a Japanese-listed global beverage group with a diversified portfolio across alcoholic and non-alcoholic beverages and food, said it plans to preserve EABL’s locally loved brands while selectively introducing globally recognised products from its international portfolio to East African consumers.

Under the terms of the agreement, Diageo will enter into long-term licensing and transitional service agreements with EABL. These arrangements will secure the continued production and distribution of Guinness, selected Diageo spirits and ready-to-drink brands, as well as the import and distribution of Diageo’s international premium spirits. Locally owned brands, including Tusker and Kenya Cane, will remain with EABL.

Adriano Joshua, a Kenya-based financial economist, said on social media LinkedIn that the primary financial driver for Diageo is deleveraging, as the company pivots to a more capital-light strategy in East Africa.

“By selling physical assets and distribution infrastructure while retaining long-term licensing agreements, Diageo will continue to earn high-margin royalty income from brands such as Guinness, Smirnoff and Captain Morgan without the operational risks or balance sheet burden of owning breweries,” Joshua said, adding that the transaction represents a major capital deployment into Africa for Asahi.

Analysts say the deal values EABL at a significant premium to its historical trading levels on the Nairobi Securities Exchange.

But a few hours after the statement was released, the Nairobi Securities Exchange (NSE) announced that it had halted trading in East African Breweries Plc shares for the rest of the day, following the issuance of a cautionary announcement relating to Asahi’s acquisition plans.

“The halt follows the release of a cautionary announcement by the issuer during trading hours, coupled with the prior circulation of market-sensitive information. These measures have been taken to promote orderly trading and ensure equitable access to information for all market participants,” the Exchange said in a statement.

The NSE added that trading in the EABL counter will resume on the next trading day.