This article first appeared on GuruFocus.
Kenya’s High Court has pushed the hearing of a legal challenge linked to Diageo Plc (NYSE:DEO)’s proposed sale of its East African business to Asahi Group Holdings Ltd. to Jan. 20, while still allowing both parties to continue pursuing regulatory approvals. The court action stems from an appeal by Bia Tosha Distributors, which is seeking to pause the transaction until its longstanding dispute involving Diageo, East African Breweries Ltd., and UDV Kenya Ltd. is resolved. For now, the legal process introduces a procedural delay rather than a full stop, leaving the broader transaction timeline potentially intact.
The proposed deal involves Diageo selling its 65% stake in East African Breweries for $2.3 billion, marking another step in its ongoing repositioning away from parts of Africa. East African Breweries said the court issued a temporary preservation order lasting 11 days that restrains only the final steps of the sale, noting that a transaction of this size typically requires months of regulatory engagement before completion. The company added that the interim direction may not affect the overall outline of the transaction as regulatory discussions continue.
For investors, the situation fits into Diageo’s broader pattern of asset disposals across the continent, following exits from businesses in Seychelles, Nigeria, Cameroon, Ethiopia, and the sale of its majority stake in Guinness Ghana Breweries last year. East African Breweries, best known for producing the Tusker beer brand, remains focused on its core markets of Kenya, Uganda, and Tanzania, while distributing products in more than 10 countries. While the court process could introduce timing uncertainty, the strategic direction behind the sale appears aligned with Diageo’s recent portfolio actions.