Diageo is selling its 65% stake in East African Breweries (EABL) for $2.3 billion to Asahi, marking the first time a Japanese giant has made a major investment in an African alcohol business.
The owner of Johnnie Walker whisky and Guinness said the sale is part of its strategy of offloading non-core brands and reducing debt. Last year it sold its 58% shareholding in Guinness Nigeria.
Asahi, whose brands include Peroni and Grolsch, intends to preserve local products while introducing globally-recognised names from its portfolio to consumers in East Africa.
EABL is the largest beer business in East Africa with a heritage that dates back over a century and has delivered a strong growth track record in Kenya, Uganda and Tanzania.
Diageo has committed to enter into long term licensing agreements as well as transitional service agreements with EABL. Locally-owned brands, such as Tusker and Kenya Cane, will remain owned by EABL.
There will be refreshed agreements for EABL to produce certain Diageo spirits (e.g. Smirnoff, Captain Morgan) and ready-to-drink brands (e.g. Smirnoff Ice, Orijin), as well as the iconic Guinness brand under licence and the import and distribution of Diageo international premium spirits.
Nik Jhangiani, interim chief executive at Diageo, said: “We are incredibly proud of the achievements of EABL and our colleagues across Kenya, Uganda and Tanzania.
“EABL and Diageo have built the largest beer business in East Africa, a testament to driven people with a passion for the consumers and communities they serve. We are excited to partner with Asahi through the licensing of Diageo brands in the region going forward.”
Diageo said the transaction delivers both significant value for its shareholders and accelerates its commitment to strengthen its balance sheet.
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