Diageo plc has announced an agreement to sell its controlling stake in East African Breweries plc (EABL) to Japan’s Asahi Group Holdings, Ltd.
The deal, valued at an estimated Sh302.92 billion ($2.35 billion) in net proceeds for Diageo, sees the giant sell its 100% shareholding in Diageo Kenya Limited (DKL), which holds 65% shareholding in the Nairobi-listed brewer, along with its direct stake of 53.68% in the spirits business UDVK valued at Sh83.27 billion ($646 million).
This strategic disposal aligns with Diageo’s ongoing commitment to strengthen its balance sheet and reduce leverage by offloading its African assets. The transaction, which values 100% of EABL at an implied enterprise value of Sh618.72 billion ($4.8 billion), is expected to reduce Diageo’s leverage by approximately 0.25 times.
For Diageo, the sale represents a disciplined step toward returning to its target leverage ratio, facilitated by the selective divestment of what it deems non-core assets.
According to Nik Jhangjani, Diageo’s Interim CEO, the group is incredibly proud of the achievements of EABL and its colleagues across Kenya, Uganda and Tanzania. However, this move delivers significant shareholder value while accelerating the company’s deleveraging goals.
“We remain committed to returning the Group to well within our target leverage ratio range of 2.5 – 3.0x through disposals of non-strategic, non-core assets, alongside delivering positive operating leverage, and tighter capital discipline,” said Nik Jhangjani.
On the other hand, for Asahi, this acquisition marks a historic foray into the African market. It is the first time a major Japanese brewing conglomerate has made an investment of this scale in an African alcohol beverage business. In accordance to Atsushi Katsuki, Asahi’s President and CEO, the move is an advantage to the company’s expansion plans.
“This business is a high-quality, leading company in Kenya, Uganda, and Tanzania, with an unrivalled brand portfolio and marketing capabilities, state-of-the-art production facilities and strong market shares. Together with its excellent management team and employees, we will pursue sustainable growth and medium- to long-term enhancement of corporate value, while contributing to the development of the local economies,” Atsushi Katsuki said.
This follows the conglomerate’s plan which has seen it expand overseas in recent years with deals for the likes of Australia’s Carlton & United and the UK’s Fuller, Smith & Turner. In addition, Asahi also disclosed that the finance for the move will be provided through borrowings from financial institutions or cash on hand.
Crucially, the agreement ensures continuity for many iconic brands in the region. Diageo has committed to long-term licensing and transitional service agreements with EABL. This means production of most of its products will remain under EABL’s ownership. Furthermore, EABL will continue to import and distribute Diageo’s international premium spirits, maintaining a connection between the two beverage giants.
The transaction, which is subject to regulatory approvals, is expected to be complete in the second half of 2026. It will represent the passing of the torch for a century-old East African brewing institution.
