The paper wealth of minority investors in East African Breweries Plc (EABL) increased by Sh13.2 billion or 18.94 percent on Thursday, on news that the majority shareholder Diageo Plc was selling its 65 percent stake to Japan’s food and beverage firm Asahi for an equivalent of Sh590.5 per share.
The brewer’s stock on Thursday rallied to a new 52-week high of Sh299.75, rising from Wednesday’s closing price of Sh252 in a move that boosted the wealth of EABL’s minority investors holding a 35 percent stake in the firm.
Investors bought 457,069 shares worth Sh137 million at higher prices, taking cue from the record price to be paid to Diageo which amounts to a payout of Sh303.5 billion for the 514 million EABL shares.
In addition to divesting from EABL, Diageo is also offloading a 53.68 percent holding in spirits producer and importer UDV Kenya to Asahi for $646 million (Sh83.29 billion), taking its total earnings from the transactions to Sh386.8 billion.
EABL’s stock traded at a range of between Sh280 and Sh351 on Thursday to close at the average of Sh299.75 as investors reacted to the massive premium negotiated by Diageo.
Asahi has however cautioned the minority investors –who have not been given a buyout offer by the Tokyo-based multinational— against taking the deal with Diageo as an indicator of the stock market value of EABL’s shares.
“The Diageo consideration does not represent, and should not be construed as, a direct price per share or valuation of the ordinary shares of EABL,” Asahi said in a public announcement.
“Caution should therefore be exercised against forced equivalence or direct look through in respect of the price for the ordinary shares of EABL.”
The multinational noted that the purchase of EABL shares, which is being implemented indirectly through the investment vehicle Diageo Kenya, comes with additional commercial arrangements with the British multinational besides customary contractual protections.
EABL is the latest Nairobi Securities Exchange-listed firm where a significant or majority shareholder has exited at a substantial premium to the market price in negotiated transactions, indicating persistent undervaluation of a section of publicly-traded companies.
Others are Safaricom, Britam, East African Portland Cement and I&M Group.
Thursday's price gain has slashed EABL’s dividend yield to 2.66 percent, one of the lowest among blue-chip firms. The company paid a dividend of Sh8 per share for the year ended June 2025.
Asahi says its acquisition of a controlling stake in the brewer will result in expansion of the company’s products even as it retains its existing offerings under a licensing deal with Diageo.
The Japanese firm said it will introduce some of its leading international beer brands to the local market through EABL.
“There will be refreshed agreements for EABL to produce certain Diageo spirits (e.g. Smirnoff, Captain Morgan) and ready-to-drink brands … as well as the iconic Guinness brand under licence and the import and distribution of Diageo international premium spirits,” Asahi said.
