A Kenyan beer distribution company has asked a court to block Diageo’s planned US$2.3 billion sale of its majority stake in East African Breweries Limited (EABL) to Japan’s Asahi Group Holdings, citing unresolved legal disputes.
Bia Tosha, a local beer distributor, has filed a case at Kenya’s High Court seeking to suspend the transaction until ongoing litigation between the parties is concluded, a lawyer representing the company said on Wednesday.
Diageo, the world’s largest spirits producer, announced last month that it had agreed to sell its 65 percent stake in EABL to Asahi, marking one of the biggest corporate transactions in East Africa’s consumer goods sector.
The British multinational said the deal was part of a strategic review of its operations as it responds to shifting consumer preferences and external pressures, including higher costs linked to US trade tariffs.
However, Bia Tosha argues that the transaction should not proceed while its legal case against Diageo and EABL remains unresolved. The distributor has asked the court to issue an injunction temporarily blocking the sale.
The dispute stems from a competition case in which Bia Tosha alleges that its commercial relationship with EABL and Diageo was unfairly terminated, restricting its ability to operate in Kenya’s beer distribution market.
According to court filings cited by the distributor’s legal team, the company contends that allowing the sale to proceed could complicate or undermine enforcement of any future court rulings related to the dispute.
Neither Diageo nor EABL immediately responded to requests for comment on the court action.
More Read
EABL, headquartered in Nairobi, is East Africa’s largest brewer, with operations spanning Kenya, Uganda and Tanzania. Its brands include Tusker, Bell Lager and Nile Special, as well as licensed international products.
The company plays a dominant role in the region’s alcoholic beverages market and is a major contributor to government tax revenues and employment.
Diageo has been a shareholder in EABL for decades and has steadily increased its stake over time. The proposed sale to Asahi would mark a significant shift in ownership of one of Africa’s most prominent consumer goods companies.
Asahi, Japan’s largest beer producer, has expanded aggressively outside its domestic market in recent years, acquiring assets in Europe, Australia and Asia as beer consumption declines at home.
The proposed acquisition of Diageo’s stake in EABL would give Asahi control of a key African growth market, where beer consumption remains relatively resilient despite economic pressures.
Legal analysts said the court challenge highlights the complexity of large cross-border transactions in markets where commercial disputes and regulatory issues can intersect.
Kenya’s Competition Authority has in recent years stepped up scrutiny of mergers and acquisitions, particularly in sectors with high market concentration.
While it is not yet clear whether the legal action will delay or derail the deal, any court-ordered suspension could introduce uncertainty into the transaction timeline.
The High Court has not yet set a date for a hearing on the application, according to Bia Tosha’s lawyer.
Kenya’s beverage sector has faced mounting pressures from higher taxes, rising input costs and subdued consumer spending, prompting companies to reassess their strategies.
Despite these challenges, multinational firms continue to view East Africa as a long-term growth market due to its young population and expanding urban middle class.
The outcome of the court case could have implications beyond the Diageo-Asahi transaction, potentially influencing how future acquisitions are structured amid unresolved commercial disputes.
As the legal process unfolds, investors and regulators will be watching closely to see whether Kenya’s courts intervene in one of the region’s most closely watched corporate deals.
