The High Court has dismissed a third legal suit that sought to block the final sale of British multinational Diageo’s entire 65percent stake in East African Breweries Limited (EABL) and its holding in spirits maker UDV Kenya to Japanese beverage firm Asahi Group Holdings.
The court declined to grant orders sought by Kenyan firm JILK Construction Company and three co-petitioners to suspend the transaction pending determination of a constitutional petition challenging the sale.
The court found no sufficient link between the deal and the contractor’s long-running commercial disputes with EABL.
The ruling came weeks after a Nairobi beer distributor, Bia Tosha Distributors Limited, lost twin bids to stop the transaction pending conclusion of a multi-billion beer distributorship row with EABL.
In both cases, the court rejected use of old disputes to stall the EABL share sale.
The court’s decision puts Diageo on track to complete the sale of its 65 per cent stake to Japan’s Asahi Group between July and December 2026, with the National Treasury expected to get Sh42 billion in capital gains tax. In the Sh300 billion deal, Asahi would take full control of Diageo Kenya Limited, the investment vehicle through which the British firm holds the EABL stake. The Japanese firm would also take ownership of Diageo’s 53.68 percent holding in UDV Kenya. EABL owns the remaining UDV Kenya stake and also has management control of the unit.
The transaction now awaits merger clearance from the Competition Authority of Kenya after receiving approvals in Uganda and Tanzania.
In dismissing Jilk Construction’s application, the judge found that the petitioners had not demonstrated a sufficient legal connection between their grievances and the proposed share transfer.
The petitioners neither claimed ownership of the shares being sold nor entitlement to the transaction proceeds, the court said. Their claims arose from separate commercial disputes and litigation that could still be determined even if the transaction proceeded.
“The reliefs sought in the petition are largely declaratory in nature and can still be considered by the court,” the judge held.
The court further found that EABL and Kenya Breweries Limited would continue to exist regardless of changes in their upstream shareholding structure and would remain subject to Kenyan law and judicial processes.
The petitioners had argued that the transaction should be suspended because of unresolved claims arising from a dispute involving refurbishment works at Kenya Breweries’ Kisumu plant and alleged violations of the United Nations Guiding Principles on Business and Human Rights.
Court filings show that the dispute traces its origins to construction contracts awarded in 2017 for refurbishment works at the brewery. The disagreement later expanded into arbitration proceedings, commercial litigation and related legal claims.
JILK sought to link those disputes to the proposed share transfer, arguing that completion of the transaction could undermine enforcement of future claims and weaken accountability for alleged rights violations.
The court was not persuaded. The judge agreed with findings in an earlier challenge brought by beer distributor Bia Tosha Distributors, which had also sought to stop the transaction on different grounds.
In both cases, the court found no sufficient nexus between historical commercial disputes and the proposed change in shareholding.
The court also declined to accept the petitioners’ argument that the United Nations Guiding Principles on Business and Human Rights constituted binding legal rules capable of stopping the transaction.
While recognising the importance of the principles, the court found they had not been shown to have the force of a ratified treaty or binding customary international law capable of grounding the orders sought.
The court noted that the deal carries significant public finance consequences, including an estimated Sh42 billion capital gains tax liability expected to accrue to the Exchequer.
“In my view, public interest favours the conclusion of the transaction,” the judge said, adding that the transaction would have a significant public finance impact.
EABL welcomed the ruling, saying it reinforced the principle that unrelated historical disputes should not be used to delay transactions of major economic significance.
“As a responsible listed company, EABL has at all times respected the court process,” the brewer said in a statement.
The company said it remained focused on delivering long-term value to shareholders and supporting businesses, suppliers and workers linked to its operations across East Africa.
The latest decision marks the second major court victory for Diageo and EABL in their efforts to defend the transaction against legal challenges.
Last month the High Court dismissed an application by Bia Tosha Distributors seeking to stop the deal pending resolution of a long-running distributorship dispute with Kenya Breweries.
