Diageo plc (NYSE:DEO) stock rose Wednesday after the company reported agreement to sell its stake in East African Breweries plc (EABL), along with its shareholding in the Kenyan spirits business, to Asahi Group Holdings, Ltd.
The transaction represents a 17x adjusted EBITDA and implies a total enterprise value of $4.8 billion for 100% of EABL and is expected to generate $2.3 billion in net proceeds after tax and costs.
Sold Assets Details
In particular, the company is selling its 100% stake in Diageo Kenya Limited, which holds 65% of EABL, including its shareholding in the Kenyan spirits business UDVK.
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The transaction includes Diageo’s 53.68% direct stake in UDVK. EABL, which owns the other 46.32%, has management control and fully consolidates UDVK.
The sale aligns with Diageo’s strategy of selectively divesting non-core assets to strengthen the balance sheet and support its ongoing de-leveraging efforts.
Asahi is a Japanese-listed global beverage leader offering a diverse portfolio of brands centered on beer, alcohol, and non-alcoholic beverages, as well as food.
Further Details
Diageo will enter into long-term licensing agreements with EABL to ensure the continued production and distribution of Guinness, local spirits, ready-to-drink brands, and Diageo’s international spirits.
The deal completion, pending regulatory approvals, is expected in the second half of 2026.
Diageo has committed to entering into long-term licensing agreements as well as transitional service agreements with EABL. Locally owned brands will remain owned by EABL (e.g., Tusker, Kenya Cane).
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 license and the import and distribution of Diageo international premium spirits.
Management Commentary
Nik Jhangiani, Interim Chief Executive Officer of Diageo, said, “We remain committed to returning the Group to well within our target leverage ratio range of 2.5 – 3.0x through disposals of non-strategic, non-core assets, alongside delivering positive operating leverage, and tighter capital discipline. This disposal, alongside the recent announcement by USL1 to conduct a strategic review of its ownership of RCB2, represent material steps in delivering on this commitment.”
DEO Price Action: Diageo shares were up 1.36% at $90.61 during premarket trading on Wednesday, according to Benzinga Pro data.
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