Diageo sells East African Breweries stake to Asahi for $2.3 billion dollars

Diageo has reached an agreement to sell its majority holding in East African Breweries to Asahi for 2 point 3 billion dollars. This strategic move is part of Diageo’s ongoing plan to divest noncore assets, strengthen its balance sheet and accelerate growth. The sale includes Diageo’s 65 percent stake in East African Breweries and its controlling interest in UDVK, a spirits producer and importer based in Kenya.

Asahi, which already owns prominent brands such as Peroni and Grolsch, regards the acquisition as an opportunity to access an extensive portfolio of brands, established marketing capabilities and advanced production facilities within East Africa. The transaction is expected to complete during the second half of next year and East African Breweries is set to maintain its current listings on the stock exchanges in Kenya, Tanzania and Uganda.

The deal aligns with Diageo’s asset light approach in the African beer market. Over the past year, Diageo has reduced its exposure in selected African markets, including the sale of its 58 percent shareholding in Guinness Nigeria and its 80 point 4 percent controlling stake in Guinness Ghana Breweries. These measures are part of a coordinated effort to manage the group’s net debt, which stood at 21 point 9 billion dollars at the end of June, equivalent to 3 point 4 times adjusted profits.

Market analysts have welcomed the sale, describing it as a positive outcome for Diageo shareholders. The transaction is considered consistent with Diageo’s broader strategy of substantial portfolio restructuring, moving beyond incremental adjustments. The company has not indicated which additional noncore assets may be divested, but has confirmed it is assessing its majority stake in India’s Royal Challengers Bengaluru cricket team, with a potential sale expected to yield significant additional funds.

Despite outperforming market expectations in its first quarter, Diageo trimmed its sales guidance for the full year due to declining demand for white spirits in China and subdued consumer sentiment in the United States. The group’s shares, which have experienced a sharp decline over the past year, saw a modest uptick following the announcement of the East African Breweries sale.

Diageo continues to implement a three year cost savings programme totalling 625 million dollars, focusing on streamlined work processes, supply chain optimisation and targeted reductions in advertising and marketing expenditure. By halving advertising spend in the United Kingdom and reducing the number of agencies it employs by 30 percent, the company is seeking to drive efficiencies and support future profitability. The leadership transition, with Sir Dave Lewis set to take over as chief executive in January, signals a new phase in Diageo’s operational and strategic direction.