Diageo today (11 September) confirmed Kenya’s anti-trust authority has approved the company’s deal to sell its majority stake in East African Breweries.
The transaction with Asahi Group Holdings, which covers Diageo’s business in Kenya, including its 65% stake in East African Breweries (EABL), was announced in December last year.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
However, the $2.3bn sale, which also includes Diageo’s 53.7% shareholding in Kenyan spirits group UDVK, has faced regulatory and legal scrutiny.
According to Bloomberg, the Competition Authority of Kenya has given the green light to the deal as long as money is put aside to settle liabilities that could arise from the transaction.
Just Drinks understands a legal challenge remains in play. It centres on Diageo’s decision to increase its stake in EABL four years ago.
This publication has approached the Competition Authority of Kenya for comment.
Last month, Diageo pushed back against a reported demand from the anti-trust body to set up a fund to cover potential liabilities.
In a statement sent to Just Drinks today, a Diageo spokesperson said: “Diageo notes the approval by the Competition Authority of Kenya (CAK) regarding the proposed transaction with Asahi Group Holdings, Ltd. We welcome this regulatory step and remain focused on concluding the transaction in accordance with the law and all applicable regulatory frameworks.”
Diageo’s sale of its business in Kenya is the latest in a line of disposals in Africa.
Under the terms of the deal with Asahi, Diageo is to enter into licensing and transitional service agreements with EABL.
There will also be new deals for EABL to produce Diageo spirits brands including Smirnoff and Captain Morgan as well as Guinness under licence.
When the companies announced the transaction last year, Asahi said the assets “offer high growth potential and stable profitability”. The deal marks Asahi’s first acquisition in Africa.
The Super Dry brewer said it would maintain the listing status of the publicly traded EABL and did not plan to take its stake beyond 65%.
A spokesperson for Asahi said today: “We have been informed of the Competition Authority of Kenya’s decision regarding the transaction. We are engaging with the relevant stakeholders and will provide a further update in due course.”
