A High Court ruling that was expected to clear the runway for Diageo and Asahi Group Holdings to complete Kenya’s biggest-ever corporate share sale has instead opened the door to even more scrutiny.
The Sh305 billion takeover of East African Breweries Limited (EABL) is no longer simply a blockbuster corporate transaction. It is now sitting at the intersection of regulatory battles, minority shareholder complaints, a long-running commercial dispute, allegations of sexual harassment and a decade-old fight with a distributor.
For Diageo, the message from the High Court is blunt: the exit is not yet clean, and the unfinished business surrounding EABL cannot simply be swept aside before the keys are handed over.
Justice Bahati Mwamuye’s decision on Monday effectively kept several legal avenues open.
The Competition Authority of Kenya can continue scrutinising the transaction for as long as it considers necessary. The Capital Markets Tribunal can proceed with an appeal challenging the exemption that allowed Asahi to avoid paying minority shareholders the same price it is paying Diageo.
And the ownership structure of EABL remains frozen in the form it held on June 18, 2026, when a Machakos court first halted the transaction following a case brought by shareholder Christine Irungu.
The constitutional petition still has to be heard.
A Court Freeze — Not the Green Light Diageo Wanted
Diageo and Asahi had asked the court to lift the conservatory orders completely.
Their argument was straightforward: Irungu’s complaints should be dealt with by specialised regulators and tribunals rather than through a constitutional petition.
The court was not persuaded to go that far.
Instead, the judge maintained the status quo, allowing the Competition Authority and Capital Markets Tribunal to perform their statutory functions while protecting the rights being asserted in Irungu’s petition.
That leaves the Sh305 billion transaction in an uncomfortable position.
It is alive, but it is not free.
Irungu alleges that Diageo, EABL and the regulators failed to disclose material information surrounding the transaction, including the control premium and the risks facing minority shareholders.
She further argues that the Capital Markets Authority failed in its responsibility to protect minority investors from a majority shareholder extracting a premium that was not extended to the wider market.
She also challenges the Competition Authority’s assessment of what transferring control of Kenya’s dominant beer business to a new foreign owner could mean for competition and the public interest.
Those allegations have not been determined.
But neither have they disappeared.
They will now have their day before the relevant legal forums.
The Sh47 Billion Question Behind the Deal
The numbers explain why this transaction has attracted such fierce scrutiny.
Between 2022 and 2023, Diageo conducted a tender offer that increased its stake in EABL from approximately 50.03 percent to 65 percent.
The additional shares cost Diageo about Sh22.7 billion.
Then came the spectacular exit.
In December 2025, Diageo agreed to sell its consolidated EABL position to Asahi in a transaction valuing the entire brewer at approximately $4.8 billion.
After tax, Diageo is expected to receive roughly $2.3 billion — equivalent to somewhere between Sh297 billion and Sh305 billion depending on the exchange rate.
But the most explosive number may be the price attached to control.
The controlling block effectively carries an implied value of about Sh590 per share.
EABL, meanwhile, was trading around Sh281 to Sh282 on the Nairobi Securities Exchange this week.
That means the price attached to control is more than twice the prevailing market price.
On the most conservative interpretation of the figures contained in court filings, Diageo could pocket approximately Sh47 billion in profit on the incremental stake it acquired through the earlier tender offer — before accounting for the premium on the shares it already owned.
That is where the anger among minority shareholders becomes understandable.
Investors who sold shares during the 2022–2023 tender offer did not receive the control premium that Asahi is now effectively paying for the controlling position.
Those who stayed invested have not been offered an equal opportunity either.
Under ordinary circumstances, an acquirer taking control is expected to extend an offer to the remaining shareholders.
But Asahi received an exemption from the Capital Markets Authority, working alongside counterpart regulators in Uganda and Tanzania.
Fund managers have challenged that decision.
Their argument is that the exemption effectively turns a conventional change of control into an exceptional transaction — one that allows Asahi to acquire Diageo’s controlling stake without paying the remaining 35 percent of shareholders the same price.
That fight has now moved to the Capital Markets Tribunal.
Diageo Is Still Collecting EABL Dividends
There is another twist that makes the delay particularly striking.
Despite agreeing to sell its 65 percent stake, Diageo remains the registered owner while the transaction remains unresolved.
That means it continues to enjoy the financial benefits of ownership.
EABL’s recommended final dividend for the financial year ending June 2026 would put approximately Sh4.47 billion into Diageo’s hands if the shares remain registered to it when the shareholder register closes.
In other words, a company that has already agreed to leave is still collecting money from the business as though the exit has not happened.
That arrangement may be perfectly lawful.
But politically and commercially, it makes the prolonged uncertainty even harder to ignore.
The Kisumu File Diageo Cannot Simply Leave Behind
Then there is the dispute EABL has spent nearly two years arguing should be treated as entirely separate from the sale.
JILK Construction Company Limited was the contractor on Project Nafasi, the multibillion-shilling redevelopment of the Kenya Breweries brewery in Kisumu between 2016 and 2018.
JILK is pursuing an arbitration claim against Kenya Breweries Limited worth approximately Sh2.45 billion plus interest.
It has separately asked the courts to compel Diageo, KBL and EABL to set aside up to Sh3 billion pending determination of the dispute.
The concern is obvious: if the Asahi transaction closes before the dispute is resolved, JILK fears that recovering money through Kenyan enforcement could become significantly more difficult.
But the commercial dispute has another, much more serious layer.
Court filings and formal complaints from JILK contain allegations concerning conduct at the Kisumu project between October 2017 and March 2018.
The allegations involve Brendan Daly, an Irish national identified in the filings as the Diageo-supervised project manager on the ground, and Nicholas Quirke, another foreign consultant working alongside him.
The allegations remain contested and have not been tested in a criminal court.
They include claims of demeaning language directed at female workers, pressure on women to remain behind after meetings and social events, differential treatment based on appearance, retaliation against employees who objected and requests for money for alcohol.
JILK’s filings also characterise the dispute as involving a racial dynamic between Black Kenyan workers and white foreign officials on the site.
These are serious allegations.
And while Diageo, EABL and KBL have rejected them, they remain part of the wider legal record surrounding a company that is now being transferred to a new owner.
The Complaint Was Raised. Then the Fight Escalated.
Two women involved in the allegations reported the matter at Muthaiga Police Station in January 2020.
JILK says it had already lodged a formal complaint with KBL’s compliance department in October 2019.
Then, on February 5, 2020, the Directorate of Criminal Investigations formally notified EABL managing director Jane Karuku about the allegations.
KBL’s response, according to reporting on the case, was that the complaint was made after Daly had already left Kenya.
But the controversy did not end there.
JILK’s directors allege that EABL’s whistleblower system was subsequently used against them rather than to protect them.
They claim a report was fabricated and used to justify stopping publication of an arbitration award that JILK was positioned to win.
Diageo, EABL and KBL have rejected those allegations as false and malicious.
They also maintain that Daly was not their employee, but worked through another contractor, JAE Engineering, meaning responsibility for his conduct rested elsewhere.
The legal battle over who knew what, when they knew it and who was responsible is therefore still very much alive.
A Fight That Has Reached the DPP
JILK managing director Sammy Maina Kamau has pushed the dispute further.
In January 2026, he wrote to the Director of Public Prosecutions outlining plans to pursue private criminal charges against EABL’s outgoing chief executive Jane Karuku, group corporate relations director Eric Kiniti and Daly.
He also asked the DPP to assist in facilitating Daly’s return to Kenya for questioning.
Karuku and Kiniti, through their lawyers, threatened to sue Maina for defamation.
Maina’s response was reportedly simple: proceed.
Meanwhile, a Nairobi magistrate has already declined to summon the chief executives of Diageo, KBL and EABL over the fraud and harassment allegations, saying an earlier motion first needed to be resolved.
That was a procedural setback.
It was not a judicial declaration that the underlying allegations were false.
And that distinction matters.
The core timeline remains uncomfortable: a formal complaint was raised in 2019, a police report followed in January 2020, and six years later the dispute remains entangled in litigation.
The men named in the complaint are still fighting the matter in a legal environment that now overlaps with the battle over whether Asahi can complete its Sh305 billion acquisition.
Diageo’s Own Integrity Promises Face the Spotlight
The allegations also sit uneasily beside Diageo’s own public commitments.
The company promotes a Dignity at Work policy, human rights commitments, brand promoter standards designed to prevent sexual harassment and a SpeakUp whistleblower channel.
Those systems are presented as safeguards designed to ensure that complaints are heard and integrity concerns are properly handled.
Yet alongside those commitments sit a written complaint from 2019 and a police report from 2020 which, according to JILK’s account, were followed by prolonged litigation.
Diageo and the other companies deny the allegations.
But the existence of the complaint, the police report and the subsequent legal battles means the issue is no longer something that can simply be dismissed as background noise.
The Distributor War That Refuses to Die
The Kisumu dispute is not the only old wound still open.
Bia Tosha Distributors Limited has been fighting KBL, EABL, UDV Kenya and Diageo since 2016 over the repossession of distribution territories in Nairobi and Kajiado.
Bia Tosha says it paid Sh27.3 million in goodwill and was never refunded.
It estimates damages at approximately Sh25 billion if it ultimately wins.
The distributor has also warned that pursuing Diageo in the United Kingdom after the company exits Kenya could be substantially harder than enforcing a judgment while Diageo remains connected to the Kenyan business.
The High Court has twice rejected Bia Tosha’s attempts to stop the Asahi sale over the dispute, most recently in June.
The company has indicated it intends to appeal.
And there is a significant legal history behind that battle: the Supreme Court has previously reinstated conservatory orders in Bia Tosha’s favour and found that lower courts had failed to conclusively address the distributor’s claims.
The Regulator Wants Billions Ring-Fenced
The Competition Authority’s position makes the unresolved disputes even more significant.
During briefings to Parliament’s Finance and National Planning Committee, director general David Kemei disclosed that the authority wants EABL to ring-fence a reserve fund equivalent to roughly four percent of the transaction value.
That would amount to approximately Sh15.5 billion.
The money is intended to cover potential claims, including Bia Tosha’s approximately Sh8 billion demand and JILK’s roughly Sh2.45 billion claim, alongside other third-party liabilities that could emerge after Diageo leaves.
The authority had initially sought a reserve equivalent to 10 percent of the transaction value before reducing the requirement to four percent after reviewing the claims.
But the regulator is also taking aim at another long-standing concern: EABL’s dominance over refrigeration space in retail outlets.
It has proposed requiring EABL to reserve at least 20 percent of the refrigeration space it supplies to retailers for competing brands.
That is a direct challenge to what critics say has helped cement EABL’s dominance of Kenya’s beer market.
The company has pushed back.
A spokesperson has described the concerns as entirely unrelated to the transaction and argued that imposing such conditions would be unlawful.
EABL has similarly maintained that KBL and UDV Kenya — the companies actually conducting business in Kenya — remain separate from whoever ultimately owns EABL.
That argument has now been tested repeatedly in courtrooms.
So far, the regulators and courts have refused to simply accept it.
What Is Really at Stake for Shareholders?
For ordinary EABL shareholders, the situation is becoming increasingly difficult to digest.
They have watched a controlling shareholder increase its stake through a tender offer, later sell control at an implied price of more than twice the prevailing market value and benefit from an exemption that prevents the remaining shareholders from receiving the same price.
They are now left waiting.
Waiting to see what conditions the Competition Authority ultimately imposes.
Waiting to see whether the proposed reserve fund survives the legal challenge.
Waiting to see whether the refrigeration-space conditions become reality.
And waiting to find out when Asahi will actually assume control of the brewer.
For Asahi, the delay carries its own price.
Japan’s largest brewer is making its biggest African investment while taking on a company surrounded by unresolved litigation.
It is not simply buying Tusker, Kenya Cane and the Guinness licence.
It is buying into a legal and regulatory landscape that remains unfinished.
Every additional month of uncertainty means more advisers’ fees, more integration risk and more questions from investors about why a transaction once expected to close in the second half of 2026 remains stuck.
The Treasury Is Waiting Too
Then there is the government’s stake in the arithmetic.
The Kenya Revenue Authority is waiting for capital gains tax estimated at approximately Sh42 billion — potentially one of the biggest single transaction tax receipts in Kenya’s history.
If the transfer remains frozen, that money remains with Diageo rather than reaching the National Treasury.
The delay therefore affects more than the buyer and seller.
It touches minority shareholders, regulators, creditors, claimants and the government itself.
The “Forum Shopping” Argument Has Not Closed the Case
EABL wrote to Chief Justice Martha Koome in June complaining about forum shopping after a Machakos court imposed a freeze on the transaction on the same day a Nairobi judge declined to do so.
Monday’s ruling does not deliver the clean victory EABL appeared to be seeking.
Instead, it leaves the Competition Authority free to continue its examination.
It allows the Capital Markets Tribunal to hear the challenge to the takeover exemption.
And it leaves Christine Irungu’s constitutional petition standing.
That is significant.
Because whatever Diageo, EABL and Asahi may say publicly about the disputes being unrelated to the transaction, the courts have now allowed several of those issues to remain in play while the Sh305 billion deal is being examined.
Diageo’s Exit Is Anything But Clean
Diageo spent more than two decades building EABL into East Africa’s largest brewer.
It strengthened its control through a tender offer conducted years before the much larger premium attached to the eventual sale to Asahi.
Now it is attempting to leave Kenya with the brands continuing under licence while transferring ownership of the operating company — and with a growing list of unresolved disputes sitting around the business.
There is nothing unusual about litigation surrounding a major corporate transaction.
What makes the EABL deal different is the sheer number of unresolved questions converging at precisely the moment Diageo is trying to exit.
The High Court has now made one thing clear:
Kenya’s regulators, tribunals and courts are not prepared to simply clear the way and let the Sh305 billion deal roll through without examining what lies underneath it.
The sale may still happen.
But before Diageo finally walks away, the courts and regulators have made it clear that some unfinished business must first be confronted.
The EABL exit is no longer just a corporate sale. It is a test of how Kenya protects minority shareholders, enforces competition rules and holds powerful corporations accountable when the biggest deals collide with unresolved claims.
