Sh340billion EABL deal halted as High Court keeps Diageo-Asahi sale in limbo
The legal roadblock was triggered by EABL shareholder Christine Irungu, who has challenged the constitutionality of Diageo’s proposed sale of its controlling interest to Asahi.
The planned Sh340 billion takeover of East African Breweries Plc (EABL) by Japan’s Asahi Group Holdings has been thrown into further uncertainty after the High Court refused to lift orders blocking the completion of the multibillion-shilling transaction.
Justice Francis Gikonyo instead directed the Competition Authority of Kenya (CAK) to continue reviewing the proposed acquisition of Diageo’s 65 per cent controlling stake in EABL, while a separate legal challenge to the transaction proceeds.
The ruling effectively freezes the change of ownership. Although regulators can continue scrutinising the deal, Diageo cannot transfer its controlling interest to Asahi until the ongoing court proceedings are determined.
Justice Gikonyo ordered the parties to preserve the status quo as it existed on June 18, 2026, pending determination of an appeal before the Capital Markets Tribunal and CAK’s review.
“I do note that the petitioner sought a raft of injunctive and disclosure orders including an order of status quo to preserve the transaction,” the judge said.
He added that maintaining the existing position would allow the appeal and CAK review to proceed without prejudicing any of the parties, after which they would be free to pursue further dispute-resolution mechanisms provided under the law.
The legal roadblock was triggered by EABL shareholder Christine Irungu, who has challenged the constitutionality of Diageo’s proposed sale of its controlling interest to Asahi.
Irungu has raised concerns over transparency, access to information, consumer protection, fair administrative action and property rights. She claims Diageo, EABL and regulators have failed to disclose critical information relating to the transaction, including the tender offer, share premium, treatment of minority shareholders and safeguards surrounding the proposed change of control.
She has also questioned whether the Capital Markets Authority (CMA) and CAK have adequately discharged their statutory duties to protect investors and the wider public interest.
According to court filings, Irungu argues that the CMA failed to adequately protect minority shareholders from a situation in which a controlling shareholder could disproportionately benefit from a control premium. She has further challenged the competition implications of the transaction, arguing that CAK should examine its potential impact on consumers, distributors and competition in the beverage industry.
The High Court first issued conservatory orders on June 18 stopping completion of the deal. Diageo Kenya and Diageo Plc subsequently returned to court seeking to have the orders lifted.
Diageo argued that the shareholder’s complaints fall within established statutory frameworks governing takeovers, capital markets and competition. It pointed to a pending Capital Markets Tribunal appeal against a CMA decision exempting Asahi from making a mandatory takeover offer to EABL’s minority shareholders.
The company also noted that CAK’s review was ongoing and that any competition decision could itself be challenged before the Competition Tribunal.
Diageo maintained that the High Court should not usurp functions Parliament has assigned to specialised regulators and tribunals. It rejected claims that its acquisition of additional EABL shares through the 2022–2023 tender offer was part of a pre-arranged plan to later sell an enlarged controlling stake to Asahi.
The company also argued that Ms Irungu had delayed filing the case and failed to demonstrate either personal or public prejudice that would result from completion.
Asahi adopted a similar position, urging the dispute to be handled through mechanisms established under capital markets and competition laws.
CAK, meanwhile, raised a preliminary objection challenging the High Court’s jurisdiction. It argued that the Competition Act provides a comprehensive framework for reviewing mergers and resolving disputes arising from competition decisions, while the Fair Administrative Action Act generally requires parties to exhaust available statutory remedies before approaching the courts.
The High Court nevertheless chose to preserve the status quo rather than stop the regulatory reviews.
