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<\/p>\nAn agreed sale of East African Breweries to Japanese beer maker Asahi has hit a major roadblock as multiple lawsuits have been filed to stop it going through. Ron Emler reports.<\/p>\n
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When Diageo announced last December that it was to sell its controlling 65% stake in East African Breweries Limited (EABL),<\/a> headquartered in Kenya, to Japanese brewer Asahi, it looked to be a straightforward transaction as part of the drinks\u2019 giant\u2019s programme to unload peripheral assets and reduce its debts.<\/p>\n Six months later the US$2.3 billion deal, which is scheduled to complete later this year, has found its way to the in-tray of Kenya\u2019s Chief Justice.<\/p>\n Several suits have been filed in a bid to halt the deal before they are settled. One came from a distributor which claimed Diageo had wrongly ended a contract several years ago, while another came from a construction company. Even individual shareholders have sought to derail the deal on the grounds of unfair treatment.<\/p>\n While Diageo and EABL reject all the claims, the fact that they have been lodged in several different jurisdictions has led to Diageo requesting Chief Justice Martha Koome to consolidate them into the hands of a single court or judge.<\/p>\n Creating uncertainty<\/p>\n It says that successive petitions filed in different High Court stations have created uncertainty after Nairobi courts declined to halt the transaction while the High Court in Machakos later issued orders temporarily freezing implementation of the transaction.<\/p>\n EABL wants all current and future High Court proceedings relating to the transaction assigned to one judge or court station to avoid inconsistent decisions and expedite the hearing of the cases.<\/p>\n The brewer has also suggested that specialised tribunals established under Kenya\u2019s capital markets and competition laws be considered where appropriate.<\/p>\n \u201cForum shopping\u201d<\/p>\n The company maintains that concluding the transaction would provide certainty for shareholders, employees, suppliers and investors across Kenya, Uganda and Tanzania, while generating an estimated \u00a3245 million in capital gains tax for the Kenyan government.<\/p>\n EABL\u2019s lawyers argued: \u201cOur client is concerned that persons desirous of hindering completion of the transaction are now engaged in forum shopping across separate court stations.\u201d<\/p>\n They said the practice \u201camounts to a clear abuse of the court process and offends the principle of judicial comity between courts of concurrent jurisdiction.\u201d<\/p>\n One litigant, JILK Construction is strongly urging Judge Koome to reject the request for a single jurisdiction. It argues that its disputes with Diageo and its subsidiaries predate the proposed sale to Asahi and should not be sidelined because the multinational company wants to leave the Kenyan beer market.<\/p>\n It said its claims stem from the construction of Kenya Breweries\u2019 Kisumu plant between 2017 and 2019, involving arbitration, commercial, constitutional and criminal proceedings that remain unresolved.<\/p>\n Judge Koome has yet to issue a ruling.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Related news<\/p>\n \n \n
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