A fresh legal battle is looming over the planned sale of Diageo’s stake in East African Breweries Limited (EABL) after beer distributor Bia Tosha Distributors Limited signalled its intention to challenge a High Court ruling that cleared the transaction.
Peter Burugu, the owner of Bia Tosha, has filed an application seeking to block the multi-billion shilling deal and lift interim orders that had temporarily frozen its completion, paving the way for Japan’s Asahi Group Holdings to proceed with acquiring a controlling stake.
Burugu, the owner of Kiambu Mall and several other properties, is said to be a highly litigious personality, with almost every business entity he runs having a court case.
“The application is dismissed, and any interim orders issued earlier are hereby discharged,” the court ruled.
Early this year, Burugu had asked the High Court in Nairobi to stop the sale proceeding until its outstanding litigation against Diageo, EABL and its Kenyan subsidiary KBL over a competition dispute is settled.
The dispute dates back to 2016 when Diageo declined to renew a contract with Bia Tosh.
In a statement, EABL said the case brought by Bia Tosha has no factual or legal links to the transaction.
“Regardless of the change of majority shareholder, EABL and KBL remain independent, capable entities fully able to conduct their business and defend any litigation,” it said.
However, attention has now shifted to the distributor’s next move, with indications that it has filed, or is preparing to file, a notice of appeal to challenge the decision in a higher court. Such a move could prolong uncertainty around one of the largest corporate transactions in Kenya’s history.
Bia Tosha’s opposition stems from a long-running case filed in 2016 over the alleged wrongful termination of its beer distribution contract. The firm is seeking Sh25 billion in damages and argues that Diageo’s exit from the Kenyan market could complicate enforcement of any favorable judgment.
The distributor told the court that once Diageo exits local jurisdiction, it may be forced to pursue compensation claims abroad, potentially in the United Kingdom, making the process more complex and costly.
Deal Still on Course
Despite the looming appeal, the High Court’s decision allows the transaction to proceed for now. Under the deal, Asahi will acquire Diageo’s 65 percent stake in EABL through its investment vehicle, as well as a 53.68 percent shareholding in UDV Kenya.
The acquisition will position Asahi as the largest shareholder in EABL, marking a major shift in
EABL and its subsidiary Kenya Breweries Limited had opposed the application, warning that blocking the deal would destabilize a supply chain that supports thousands of jobs across the region.
“Kenya’s attractiveness as an investment destination depends in part on the security and predictability of property rights and the ability of companies to engage in legitimate commercial transactions without unwarranted judicial interference,” KBL submitted.
The companies argued that halting the transaction would disrupt operations affecting distributors, retailers, farmers, and other stakeholders who rely on stable production and logistics systems.
The matter is scheduled for mention on April 15 for directions on the hearing of the main case, even as the appeal process is expected to unfold in parallel.
Read: Court Lifts Block on EABL Sale, Paving Way for Asahi Takeover
>>> Court Declines To Stop Diageo From Selling Its EABL Stake
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