British multinational company Diageo Plc has agreed to sell its entire 65 percent stake in East African Breweries Limited (EABL) and its holding in the spirits maker UDV Kenya to Japanese beverage firm Asahi Group Holdings in a deal worth $2.3 billion (Sh296.6 billion), net of tax and transaction costs.
Asahi will take full control of Diageo Kenya Limited, the investment vehicle through which the British firm holds the EABL stake. Asahi will also takes ownership of Diageo’s 53.68 percent holding in UDV Kenya. EABL owns the remaining UDV Kenya stake and also has management control of the unit.
The transaction values EABL at Sh618.9 billion ($4.8 billion), which is 3.1 times the company’s current valuation of Sh198.78 billion at the Nairobi Securities Exchange (NSE).
Diageo is exiting EABL less than three years after raising its stake to 65 percent from 50.03 percent in a deal valued at Sh22.7 billion.
“This transaction delivers both significant value for Diageo shareholders and accelerates our commitment to strengthen our balance sheet. We remain committed to returning the group to well within our target leverage ratio range of 2.5 - 3.0 times through disposals of non-strategic, non-core assets,” said Diageo Plc interim chief executive officer Nik Jhangiani.
“We are excited to partner with Asahi through the licensing of Diageo brands in the region going forward.”
As part of the deal, Diageo says it has entered into long-term licensing agreements with EABL to secure the continued production and distribution of Guinness, local spirits and ready-to-drink brands, as well as the distribution of its international spirits.
The transaction forms part of Diageo’s broader strategy of shedding non-core assets, which has seen it exit major African beer markets.
In April, it sold its entire stake in Seychelles Breweries Ltd, an 80.4 percent stake in Ghana Breweries and last year ceded a 58.02 percent stake in Guinness Nigeria. This followed exits in Ethiopia and Cameroon in 2022.
Asahi Holdings, which is listed on the Tokyo Stock Exchange, produces a diverse range of beer, alcohol, and non-alcoholic beverages, and food brands. The company maintains a presence in Japan & East Asia, Europe, and the Asia Pacific, with annual revenue of $19 billion (Sh2.45 trillion).
