Diageo Sells Stake in East African Breweries to Asahi Group
Diageo has officially announced its decision to sell a significant share of East African Breweries Limited (EABL) to the Asahi Group. This transaction involves Diageo’s complete 100% shareholding in Diageo Kenya Limited, which includes a 65% stake in EABL, alongside its participation in the Kenyan spirits market through UDVK.
Transaction Details
The sale aligns with Diageo’s strategic approach of divesting non-core assets to enhance its financial position. The estimated net proceeds from this deal are projected to be approximately $2.3 billion. This figure reflects a valuation multiple of 17x adjusted EBITDA, indicating an implied enterprise value for EABL of around $4.8 billion. Furthermore, this transaction is expected to improve Diageo’s leverage ratio by approximately 0.25x.
Long-term Agreements and Commitments
Diageo has committed to establish long-term licensing agreements with EABL, ensuring the continued production and distribution of various brands, including Guinness and local spirits. This will also cover Diageo’s international spirit offerings. Asahi aims to not only retain popular local brands but also to introduce drinks from its own global portfolio to East African consumers.
Significance of the Deal
This acquisition marks a notable event, as it is the largest investment made by a Japanese brewing company in an African alcoholic beverage industry. EABL stands as the leading beer business in East Africa, with a history spanning over a century and a proven growth trajectory across Kenya, Uganda, and Tanzania.
EABL Overview
- Ownership Structure: 65% stake owned by Diageo prior to the sale.
- Local Brands: Brands such as Tusker and Kenya Cane will remain with EABL.
- Production Facilities: EABL boasts state-of-the-art production capabilities.
- Financial Performance: For the fiscal year ending June 30, 2025, EABL reported:
- Net Sales: $996 million
- EBITDA: $258 million
- Net Income: $94 million
- Net Debt: $229 million
Market Presence and Future Plans
Asahi intends to maintain EABL’s stock listings on the Kenya, Uganda, and Tanzania exchanges following the completion of this transaction, anticipated in the latter half of 2026, pending regulatory approvals. This strategic move reinforces Asahi’s commitment to sustainable growth and enhancing corporate value within the East African market.
Nik Jhangiani, Interim CEO of Diageo, expressed pride in EABL’s achievements and highlighted the importance of the local markets in their future endeavors. Asahi’s President, Atsushi Katsuki, echoed similar sentiments, emphasizing their dedication to improving local economies and enhancing corporate value as they embrace this new chapter.
