Diageo has announced the sale of its majority stakes in two Kenyan beverage companies to Japanese brewer Asahi for around $2.3 billion.
The British drinks group, which makes Guinness beer and Smirnoff vodka, said it will sell its 65% stake in East African Breweries, or EABL, and approximately 54% stake in UDVK distillery to Asahi. The remaining shares of UDVK are held by EABL.
The estimated net proceeds of around US$2.3 billion come after taxes and transaction costs, and give EABL an enterprise value of US$4.8 billion, Diageo said in a statement on Wednesday (17), projecting that the business should generate a reduction of around 25% in leverage on its balance sheet.
The transaction is expected to close in the second half of next year, the company stated. Diageo also said it has entered into long-term licensing agreements with EABL to ensure the continued production and distribution of Guinness, local spirits and other consumer products, as well as the distribution of Diageo’s international spirits.
The sales “are consistent with Diageo’s strategy of appropriate and selective disposals of non-core assets, strengthening the balance sheet and supporting the previously shared commitment to wind down,” the group highlighted.
“This transaction delivers significant value for Diageo shareholders and accelerates our commitment to strengthening our balance sheet,” said Diageo Interim Chief Executive Nik Jhangiani.
EABL is the largest brewing company in East Africa, with a solid track record of growth in Kenya, Uganda and Tanzania. Asahi anticipates that EABL will remain listed on the stock exchanges of Kenya, Uganda and Tanzania upon completion of the transaction.
