A high court in Kenya has ruled the sale of Diageo’s $2,3bn stake in East African Breweries (EABL) can proceed uninterrupted, despite pending litigation by former distributor Bia Tosha.
The legal case would now be heard on 20 January, the court said.
The deal parties could continue to take preliminary steps such as seeking regulatory approvals, provided the deal was not completed by 20 January when it would give further instructions, it added.
“The court expressly ordered that the regulatory approval processes and preliminary steps for the transaction should proceed uninterrupted,” EABL said in a statement. “The judge recognised the significance of the transaction and declined to paralyse these essential statutory processes.
“Given that a global transaction of this magnitude requires months of regulatory engagements before final completion, this interim direction has no impact on the transaction timeline.”
In December, Diageo announced it had reached an agreement to sell its 65% holding in EABL to Asahi, as it looks to further streamline its beer business.
However, Bia Tosha had this week asked Kenya’s High Court to block the deal until its own litigation against Diageo and EABL was settled. The move caused a dip in Diageo shares on Wednesday.
Bia Tosha sued EABL and Diageo in 2016, after the brewer declined to sign a new contract with the distributor. Bia Tosha no longer distributes for EABL in Kenya and its routes have been taken over by other distributors.
“We welcome the court’s decision to allow the regulatory phases of this transaction to continue,” EABL said. “We reiterate that the substantive case is a legacy commercial dispute regarding local distribution routes and has no factual or legal connection to the shareholding of our parent company.”
Diageo shares climbed by almost 2% in mid-morning trading on Friday (9 January).
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