Kenya High Court: Freezes EABL Diageo Asahi Sale Pending Appeals

• The Kenya High Court has temporarily halted the sale of Diageo's controlling stake in East African Breweries (EABL) to Japan's Asahi Group Holdings.
• The freeze will remain in effect until a Capital Markets Tribunal appeal is determined and the Competition Authority of Kenya completes its review of the transaction.
• Petitioner Christine Irungu raised concerns regarding minority shareholder rights, information disclosure, and alleged constitutional violations.
• Diageo had previously increased its EABL stake from approximately 50% to 65% through a 2022-2023 tender offer before agreeing to the sale.
• The court found that the dispute involves multiple institutions and broader constitutional questions beyond the scope of a single regulatory body.

The High Court, however, found that the dispute involves several institutions and raises broader constitutional questions that cannot be dealt with fully by a single regulatory body.

Kenya's High Court has issued a temporary injunction, effectively freezing the proposed sale of Diageo's controlling interest in East African Breweries (EABL) to Japan's Asahi Group Holdings. Justice Francis Gikonyo mandated that the ownership and control structure of EABL, as it stood on June 18, 2026, must remain unchanged. This order will persist until an ongoing appeal before the Capital Markets Tribunal is concluded and the Competition Authority of Kenya (CAK) finalizes its review of the transaction.

The significant ruling follows a petition filed by Christine Irungu, who has challenged the deal. Irungu's concerns center on several critical aspects, including the adequacy of information disclosure, the protection of minority shareholder rights within EABL, and the overall role played by market regulators in overseeing such a substantial transaction. The High Court's intervention underscores the complex regulatory landscape surrounding large-scale mergers and acquisitions in Kenya, particularly when constitutional questions are brought to the fore.

This judicial intervention means the EABL acquisition halted Kenya will remain in limbo, preventing the completion of the deal until all specified legal and regulatory hurdles are cleared. The court's decision emphasizes a cautious approach to major corporate restructuring, ensuring that due process and stakeholder interests are thoroughly addressed before a change in control can proceed.

A central point of contention in Irungu's petition revolves around Diageo's prior actions concerning its EABL stake. Before agreeing to sell its controlling interest to Asahi, Diageo had increased its shareholding in EABL from approximately 50 percent to about 65 percent. This increase was achieved through a tender offer conducted between 2022 and 2023. The petitioner has specifically questioned whether this earlier share purchase was intended to consolidate Diageo's control ahead of the eventual sale to Asahi and whether minority shareholders were provided with sufficient and transparent information throughout this process.

Irungu's legal challenge extends beyond mere transactional details, raising fundamental constitutional issues. The petition alleges violations of specific constitutional provisions, rights, and guarantees, alongside concerns regarding the proper exercise of mandates by the statutory authorities involved in regulating capital markets and competition. These broader constitutional questions were a key factor in the High Court's decision to intervene, highlighting the potential for judicial oversight even when specialized tribunals are engaged in related proceedings.

The parties involved in the transaction—Diageo, EABL, and Asahi—had opposed the application for an injunction. They contended that the issues raised by Irungu should primarily be addressed through the specialized regulatory bodies and tribunals established under Kenya's capital markets and competition laws. Furthermore, they argued that halting the transaction could negatively impact investor confidence and diminish Kenya's appeal as an investment destination. The Competition Authority of Kenya (CAK) separately argued that the High Court should not hear the case before all available regulatory appeal mechanisms had been exhausted.

However, the High Court disagreed with these arguments, determining that the dispute encompasses several institutions and presents broader constitutional questions that cannot be fully resolved by a single regulatory body. The court also noted that the CAK is still in the process of reviewing the Diageo Asahi EABL merger review and has not yet issued a decision that could be challenged before the Competition Tribunal. Concurrently, the Capital Markets Tribunal is handling an appeal lodged by EABL minority shareholders, challenging the Capital Markets Authority's decision to exempt Asahi from making a mandatory takeover offer. Justice Gikonyo emphasized that allowing the transaction to proceed before these ongoing processes are completed could undermine their integrity and effectiveness.

Justice Gikonyo's order for a status quo is designed to preserve the current state of affairs, ensuring that no irreversible steps are taken while critical legal and regulatory reviews are pending. This measure is intended to allow the appeal before the Capital Markets Tribunal to be concluded and to provide the Competition Authority of Kenya with the necessary time to determine the matters before it without external pressure or the complication of a completed transaction. The Kenya High Court freezes EABL Diageo Asahi sale, thereby asserting its role in overseeing complex corporate transactions that touch upon public interest and constitutional rights.

This ruling underscores the heightened judicial scrutiny of major M&A transactions in Kenya, particularly where complex ownership structures and minority shareholder rights are concerned. Lawyers advising on such deals must ensure exhaustive regulatory compliance and be prepared for potential High Court intervention, even if specialized tribunals are already engaged, especially when constitutional questions are raised. The decision reinforces the principle that the judiciary can step in to safeguard due process and constitutional mandates, even in commercially sensitive matters.

This ruling underscores the heightened judicial scrutiny of major M&A transactions in Kenya, particularly where complex ownership structures and minority shareholder rights are concerned. Lawyers advising on such deals must ensure exhaustive regulatory compliance and be prepared for potential High Court intervention, even if specialized tribunals are already engaged, especially when constitutional questions are raised.

Source: Original reporting via Capital FM