High Court Halts Diageo’s EABL Stake Sale to Japan’s Asahi
Appeals Court says abortion is not a fundamental right
The High Court has temporarily stopped the completion of Diageo’s proposed sale of its controlling stake in East African Breweries Plc (EABL) to Japan’s Asahi Group Holdings, pending the conclusion of ongoing regulatory and legal processes surrounding the transaction.
Justice Francis Gikonyo ordered that the ownership and control structure of EABL as it stood on June 18, 2026, should remain unchanged until an appeal before the Capital Markets Tribunal is determined and the Competition Authority of Kenya (CAK) completes its review of the proposed transaction.
The ruling follows a case filed by Christine Irungu, who has challenged the proposed acquisition, raising concerns over disclosure of information, protection of minority shareholders and the manner in which market regulators have handled the transaction.
The dispute places renewed focus on Diageo’s earlier decision to increase its shareholding in EABL from about 50 per cent to approximately 65 per cent through a tender offer conducted between 2022 and 2023.
Irungu has questioned whether the earlier acquisition increased Diageo’s controlling interest in EABL ahead of the eventual agreement to sell the stake to Asahi. She has also raised concerns over whether minority shareholders received sufficient information about the transactions and their implications.
In his ruling, Justice Gikonyo said the petition raises constitutional questions relating to specified constitutional provisions, rights and guarantees, as well as the exercise of mandates by various statutory authorities involved in the matter.
“The petition raises constitutional issues including violation of specified constitutional provisions, rights and guarantees as well as exercise of mandates by statutory authorities concerned,” the judge said.
Diageo, EABL and Asahi opposed the application seeking to halt the transaction, arguing that the issues raised by Irungu should primarily be dealt with through specialised regulatory bodies and tribunals established under Kenya’s capital markets and competition laws.
The companies also warned that stopping the transaction could negatively affect investor confidence and undermine Kenya’s attractiveness as an investment destination.
CAK separately opposed the court proceedings, arguing that the High Court should not entertain the dispute before available regulatory and appeal mechanisms had been exhausted.
The competition regulator maintained that the transaction remained within its regulatory process and that parties should allow the established procedures to run their course.
However, the High Court found that the dispute involves several institutions and raises broader constitutional questions that could not be adequately addressed by a single regulatory body.
The court also noted that CAK was still reviewing the proposed transaction and had not yet issued a decision that could subsequently be challenged before the Competition Tribunal.
This means that the competition review remains an active process, even as another dispute relating to the transaction is being considered by the Capital Markets Tribunal.
At the Capital Markets Tribunal, an appeal has been lodged by minority shareholders of EABL against a decision by the Capital Markets Authority (CMA) to exempt Asahi from making a mandatory takeover offer.
The mandatory takeover offer issue is significant because such offers are designed to provide minority shareholders with an opportunity to exit a company when control changes hands under circumstances covered by capital markets rules.
Justice Gikonyo said allowing the proposed sale to proceed before the ongoing regulatory and legal processes are concluded could undermine the proceedings already before the relevant institutions.
The judge therefore ordered the parties to maintain the existing ownership and control structure of EABL as it stood on June 18, 2026.
“An order of status quo will allow the appeal to be concluded as well as Competition Authority to determine the matters before it,” Justice Gikonyo said.
The order effectively prevents the completion of the proposed transfer of Diageo’s controlling stake to Asahi until the outstanding processes are addressed.
The ruling does not determine the merits of Irungu’s broader challenge or establish that the proposed transaction is unlawful. Instead, it preserves the existing position while the Capital Markets Tribunal considers the minority shareholders’ appeal and CAK completes its assessment of the transaction.