A Case That Refuses To Die: EABL Stake Sale Faces Fresh Challenge After Temporary Reprieve

THE DEAL AT A GLANCE

 Transaction: Diageo PLC sells 65% EABL stake + 53.68% UDV (Kenya) to Asahi Group Holdings

 Value: Sh303.5 billion ($2.354 billion) at Sh590.51 per share

 Status: Regulatory approvals pending in Kenya, Uganda, and Tanzania — expected May-June 2026

 Petitioner: Bia Tosha Distributors Limited — distributor dispute dating to 2000

 Latest development: High Court dismissal April 9, 2026; Court of Appeal notice filed April 10, 2026

It was the ruling that was supposed to end it all. On the morning of Thursday, April 9, 2026, Justice Bahati Mwamuye of the High Court’s Constitutional and Human Rights Division delivered what Diageo, EABL, and their legal teams had been arguing for three months was the only legally defensible outcome: a clean dismissal of Bia Tosha Distributors Limited’s petition to block the Sh303 billion sale of Diageo’s majority EABL stake to Japan’s Asahi Group Holdings. ‘The petitioner’s notice of motion dated 5th January 2026 is hereby dismissed,’ the judge declared, lifting all interim orders that had restrained the finalisation of the transaction.

EABL issued a statement welcoming the ruling and noting that the deal could now proceed through standard regulatory channels. Diageo’s camp exhaled. Asahi’s representatives, watching from Tokyo, had cause for quiet satisfaction. The deal they had committed $2.354 billion to — one of the largest investments a Japanese company has ever made in Africa — appeared, finally, to be free of its most persistent legal obstruction.

It lasted twenty-four hours.

By Friday morning, April 10, Bia Tosha had filed a notice of appeal against the ruling in its entirety. The notice, addressed to the Court of Appeal, stated that the company was ‘dissatisfied with the ruling and orders of the Honourable Mr. Justice Bahati Mwamuye, delivered on the 9th day of April 2026,’ and that it intended to challenge the whole of that ruling. In a tactical escalation that will unsettle the deal’s timeline, Bia Tosha also announced it was enjoining two regulatory bodies — the Capital Markets Authority and the Competition Authority of Kenya — as additional respondents in the appeal.

Both agencies are currently processing approvals that Diageo and Asahi need to complete the transaction. By pulling them into court proceedings, Bia Tosha has raised the possibility that approvals expected between May and June 2026 could become contested on grounds that go beyond the transaction’s commercial merits.

“The sale will render its case useless as splitting the shares and the exit of Diageo from the Kenyan market would have the effect of frustrating the realisation of any decree.” — Bia Tosha court filings

THE MWAMUYE PARADOX

There is a biographical irony in Justice Mwamuye being the judge who ultimately dismissed the case. Weeks earlier, it was his transfer to Kiambu High Court on February 26 — announced on the day the substantive hearing was due — that triggered the most explosive chapter of this dispute.

Bia Tosha interpreted that transfer, and his refusal to extend interim orders on that same day, as the pivotal moment that stripped them of constitutional protection and handed the deal a green light.

Managing Director Anne-Marie Burugu wrote directly to Chief Justice Martha Koome, deploying language that compared the alleged dynamics to the Epstein-Prince Andrew affair and accusing unnamed foreign actors of diplomatic intervention in Kenya’s judiciary.

Yet on April 9, when the case came before the court in Milimani as originally directed, it was Justice Mwamuye himself who sat in judgment. Whatever the circumstances of his February transfer — Judiciary officials described it as routine administrative redeployment — he returned to the matter for its final hearing.

His ruling was categorical. The court found that the issues Bia Tosha raised were contractual in nature, that the existence of a commercial dispute between private parties does not automatically justify suspension of a major corporate deal, and that appropriate legal remedies remain available to the distributor should it succeed in the underlying claim. Any other orders impeding completion were simultaneously lifted.

The ruling was precise in its separation of two things Bia Tosha has consistently attempted to conflate: the legitimacy of the underlying distributorship dispute, which the court did not dismiss or invalidate, and the appropriateness of using that dispute as a lever to halt an upstream shareholder transaction. On that second question, Justice Mwamuye sided decisively with Diageo and EABL.

WHAT THE APPEAL ACTUALLY CHANGES

The filing of an appeal notice does not automatically freeze the deal. Under Kenyan procedural law, Bia Tosha would need to separately apply to the Court of Appeal for a stay of the High Court ruling and for fresh conservatory orders if it wants to halt the transaction pending the appeal.

Given that the High Court has just declined to issue such orders after a full hearing, obtaining a stay from the appellate court will require demonstrating that the High Court made a clear error of law, or that there is a novel legal question that the Court of Appeal should consider before the deal closes.

Bia Tosha’s strategic decision to join the CMA and the CAK as respondents in the appeal adds a new dimension.

The implication is that these bodies, in processing and potentially granting regulatory approvals for the transaction while litigation is pending, may be enabling a process that the distributor contends should be paused.

Whether the Court of Appeal finds merit in that framing will depend on how it characterises the relationship between regulatory review processes and pending commercial litigation — a question that Kenyan courts have not definitively answered in a transaction of this scale.

The deal’s parties have expressed confidence that completion will occur in the second half of 2026. That timeline was built on an assumption of regulatory approvals arriving between May and June.

If the Court of Appeal is persuaded to issue any form of stay — even a partial one targeting the regulatory bodies — that timeline shifts. KBL, in opposing the original petition, argued that Kenya’s attractiveness as an investment destination depends on the security and predictability of property rights and the ability of companies to engage in legitimate commercial transactions without what it called unwarranted judicial interference.

That argument cuts both ways: the same predictability norm would counsel the Court of Appeal to be cautious about reopening a question that a full High Court hearing has just resolved.

THE SH25 BILLION CLAIM AND WHY IT MATTERS

A figure that emerged with greater clarity in the April proceedings is the quantum of Bia Tosha’s damages claim: Sh25 billion. This is distinct from the Sh38 million goodwill refund that anchors the original contractual dispute, and from the Sh39 billion contempt fine that Bia Tosha once sought at the Supreme Court.

The Sh25 billion figure represents the company’s assessment of the total commercial loss it has suffered from the termination of its distribution routes across the 22 territories granted to it under the 2000 agreement — a decade of lost revenues, compounded by years of litigation costs and business attrition.

This number matters for the appeal in a specific way. One of Bia Tosha’s core arguments has always been that enforcing a Sh25 billion judgment against a UK-headquartered multinational with no remaining Kenyan assets is materially different from enforcing the same judgment against one that holds a controlling stake in East Africa’s dominant brewer.

Diageo’s general counsel, Anthony David William Smith, swore in an affidavit that the company’s $48 billion market capitalisation and continued submission to Kenyan jurisdiction made enforcement concerns illusory.

But as Bia Tosha’s advocate Kenneth Kiplagat noted to Bloomberg in January, Diageo will have no known asset within Kenya after the sale is complete.

Those are two legally distinct positions, and the Court of Appeal may be asked to assess which characterisation of the enforcement risk is more legally credible.

THE REGULATORY GAMBIT: CMA AND CAK IN THE CROSSHAIRS

The decision to join the CMA and the CAK as respondents is the most tactically aggressive element of the notice of appeal. It signals that Bia Tosha’s next legal objective is not merely to argue for a reversal of the High Court ruling on its merits — it is to insert the court into the regulatory approval process itself.

The CMA, under the Capital Markets Act, is required to approve any change of control of a publicly listed company’s parent. EABL is listed on the Nairobi Securities Exchange.

Diageo Kenya Limited, the vehicle through which Diageo holds its 65 percent stake, will be transferring that vehicle to Asahi. The CMA’s review of this transaction is a statutory process. Similarly, the CAK reviews mergers above a prescribed threshold for competition law compliance.

By arguing before the Court of Appeal that these approvals should not be granted — or should be conditioned on resolution of the Bia Tosha dispute — the company is attempting to weaponise the regulatory process against the deal’s closure timeline.

Whether any Kenyan court would direct a statutory regulator to hold approvals pending resolution of a private commercial dispute is an open question.

The argument has no direct precedent. But the Court of Appeal has, in previous high-profile cases, issued orders with sweeping practical effect on regulatory processes — and the distributorship dispute, unlike most commercial cases, carries a Supreme Court contempt finding against EABL that gives Bia Tosha a stronger than usual platform from which to argue that it is not an ordinary commercial claimant.

“The application is collateral to the pleadings, disproportionate to any pleaded right, and seeks orders whose practical effect would bind non-parties and disrupt capital markets processes in multiple jurisdictions.” — Diageo court submission

DIAGEO’S EXIT AND THE PRESSURE BEHIND IT

To understand the urgency driving both sides, it is necessary to appreciate what is at stake for Diageo beyond this single transaction.

The company’s new CEO Dave Lewis has staked his strategic credibility on a programme of asset disposals and debt reduction. EABL was one of the crown jewels of Diageo’s African portfolio, but it was also a complexity — a partly-listed, multi-jurisdiction operating group in markets that simultaneously delivered strong returns and persistent regulatory, legal, and reputational friction. The $2.354 billion Asahi deal was designed to address all of that in a single transaction.

Diageo is navigating headwinds on multiple fronts simultaneously.

US tariff uncertainty has rattled its North American business. Global alcohol consumption trends among younger consumers are unfavourable. Debt levels, elevated by years of acquisitions, need addressing.

The company cannot afford protracted legal entanglement in Nairobi to delay net proceeds of approximately $2.3 billion that it has already factored into its balance sheet improvement projections. Every month of delay costs Diageo in financing charges, management bandwidth, and investor confidence.

Asahi, for its part, has been clear-eyed about what it is buying.

Its CEO Atsushi Katsuki, meeting EABL staff shortly after the December announcement, described the company as offering an attractive portfolio of brands, marketing capabilities, and production facilities across one of the world’s fastest-growing consumer markets.

For Asahi, the litigation cloud is a price of entry — but an unacceptable delay to entry is a different proposition entirely.

WHAT COMES NEXT

The immediate procedural clock is as follows.

Bia Tosha must file its memorandum of appeal with the Court of Appeal and, if it seeks to pause the transaction, apply separately for a stay of the High Court ruling.

The Court of Appeal will determine whether to grant that stay on an urgent basis, balancing the distributor’s claimed irreversible prejudice against the deal parties’ commercial interests and the public interest argument that a Sh303 billion investment attracting one of Japan’s largest companies into East Africa should not be held hostage to private litigation.

Regulatory approvals at the CMA and CAK are expected between May and June 2026.

If the Court of Appeal grants a stay or issues any order touching the regulatory bodies before those approvals are issued, the timeline shifts materially.

If it declines, the transaction proceeds toward completion in the second half of the year as projected, and the underlying distributorship dispute — which remains very much alive before the High Court — continues in its separate track, now with Diageo on the other side of the world.

That is the precise outcome Bia Tosha has fought to prevent for four months and, in different forms, for ten years.

The Supreme Court found EABL in contempt.

The High Court confirmed EABL’s competing distributors were wrongly appointed on Bia Tosha’s protected routes. The underlying constitutional petition has not been dismissed and will proceed to full hearing.

What Bia Tosha cannot allow — and what it is now taking to the Court of Appeal to resist — is the scenario in which all of that happens after Diageo has collected its $2.354 billion and boarded its flight out of Nairobi.

Whether the Court of Appeal agrees that this scenario represents the kind of irreversible harm that justifies halting one of Kenya’s largest-ever corporate transactions is a question that will be answered in the coming weeks. The case that refuses to die has found its next arena.