Diageo EABL unit agrees to buy SABMiller out of Kenya Breweries

Diageo EABL unit agrees to buy SABMiller out of Kenya Breweries

Diageo has agreed to acquire rival SABMiller's 20% stake in Kenya Breweries Ltd for around US$225m.

Diageo's Kenya-based subsidiary, East African Breweries Ltd (EABL), said today (6 June) that the deal is subject to it completing the disposal of its 20% shareholding in SABMiller-controlled Tanzania Breweries.

EABL will pay cash for the Kenya Breweries stake, which will enhance the Tusker lager brewer's strong foothold in the country.

As part of the deal, Kenya Breweries will cease to distribute SABMiller's beers in Kenya "after a short transition period", EABL said.

A spokesperson for SABMiller told just-drinks today: "We believe this transaction delivers far more potential upside for our brands and our broader ambitions in East Africa. We will begin importing and distributing Castle Lager and Redd's in Kenya immediately.

"We will consider all the options that are available to us following completion of the transaction."

The deal is the latest in a chess game between Diageo and SABMiller in East Africa's emerging beer markets. Last year, Diageo's EABL agreed to offload a 20% stake in Tanzania Breweries in order to acquire a 51% stake in its main rival, Serengeti Breweries.

[This story was updated at 1210 BST on 6 June to include comments from SABMiller]