Japanese conglomerate Asahi Group Holdings has received regulatory exemption in Kenya, Uganda and Tanzania from making a mandatory takeover offer for regional brewer East African Breweries PLC (EABL) following its planned acquisition for Diageo Kenya Limited.
The transaction stems from Asahi’s intention to acquire 100% of Diageo Kenya Limited from Diageo Holdings Netherlands B.V., a move that is set to give the Tokyo-based beverage company control of Diageo’s majority stake (65%) in EABL.
EABL is listed on the Nairobi Securities Exchange (NSE) and cross listed on the Dar es Salaam Stock Exchange (DSE) and the Uganda Securities Exchange (USE).
According to East African capital markets regulations, the acquisition of a majority stake in a listed company triggers a mandatory takeover offer to minority shareholders. However, the Capital Markets Authority of Kenya (CMA), the Capital Markets and Securities Authority of Tanzania (CMSA), and Uganda’s Capital Markets Authority (CMA-U) have granted exemptions to Asahi from that requirement.
“Asahi hereby announces that each of the CMA, the CMSA and the CMA-U has granted it an exemption from the requirement to make a mandatory take-over offer for EABL in Kenya, Tanzania and Uganda, (as applicable) under the Kenya Take-over regulations, the Tanzania Take-over regulations, and the Uganda Take-over regulations, respectively,” said Asahi in a statement.
Asahi Deal Progresses Amid Bia Tosha Appeal Notice
The approvals mark a key milestone in the US$2.3 billion transaction which had earlier faced legal hurdles. Earlier this year, Kenyan distributor Bia Tosha moved to court seeking to block the transaction, arguing that Diageo’s exit would undermine an ongoing litigation that has persisted for nearly a decade.
Bia Tosha claimed that:
- It was unlawfully stripped of exclusive distribution territories, including parts of Nairobi.
- Goodwill payments made to secure these territories were never refunded.
- If Diageo disposes of its only Kenyan asset, enforcing any future judgment against the company would be impossible.
The High Court of Kenya dismissed the distributors petition, allowing the transaction to proceed through the standard regulatory channels. However, the transaction ran into fresh uncertainty after Bia Tosha issued a notice to appeal the dismissal of its bid.
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