Diageo Shares Jump After $2.3bn Asahi Deal: Guinness Owner Sells East African Breweries Stake as Turnaround Debate Intensifies

LONDON — Diageo shares are back in the spotlight on Wednesday, December 17, 2025, after the FTSE 100 drinks giant behind Guinness and Johnnie Walker agreed to sell its majority position in East African Breweries to Japan’s Asahi Group Holdings in a deal worth about $2.3 billion. ^[1]

The announcement lands at a sensitive moment for investors: Diageo’s share price has been under heavy pressure for years, and the stock’s fall from its early‑2022 peak has fuelled a growing question in UK markets—is this a rare long-term buying opportunity, or a value trap until core demand recovers? ^[2]

What Diageo announced on 17 December 2025

Diageo said it has agreed to sell its 65% stake in East African Breweries plc (EABL)—a leading brewer and spirits producer across Kenya, Uganda and Tanzania—to Asahi Group Holdings for estimated net proceeds of $2.3 billion after tax and transaction costs. ^[3]

Key deal details disclosed today include:

Valuation: Diageo said the transaction implies an enterprise value of $4.8 billion for 100% of EABL, equivalent to 17x adjusted EBITDA. ^[4]
Debt impact: The company expects the disposal to de‑lever the balance sheet by around 0.25x (a key point given investor focus on leverage). ^[5]
Timing: Completion is expected in the second half of calendar 2026, subject to regulatory approvals and other conditions. ^[6]
What Diageo keeps: Diageo plans to remain present in the region via long-term licensing agreements covering production and distribution of its brands (including Guinness) and distribution of international spirits. ^[7]

Reuters framed the move as part of Diageo’s strategy of selling “non-core” assets while the company grapples with multiple pressures—tariff uncertainty in the United States, high debt levels, and shifting consumption patterns among younger consumers. ^[8]

Asahi, meanwhile, signalled it sees EABL as a platform for long-term growth in East Africa and expects to fund the acquisition with borrowings and/or cash on hand; it also noted the closing is anticipated in H2 2026. ^[9]

Diageo share price today: up on the day, but still far below its peak

On the day of the announcement, Diageo shares moved higher in London. Data from major market platforms showed the stock around the 1,720–1,725p level on December 17, 2025—roughly £17.20–£17.25 per share. ^[10]

That “£16–£17” zone matters because it’s close to where many bargain-hunters have been circling the stock—and it’s a level that underscores just how far the shares have fallen from the post‑pandemic boom.

Diageo’s all-time high was around 4,110p (GBX) in early January 2022, according to widely-followed charting data. ^[11]
A separate UK investing analysis noted the shares “topped out” at just over 4,000p in the first quarter of 2022. ^[12]

In other words: even after today’s pop, the long-term chart still tells a story of a major global consumer name that has been de-rating for years.

Why this deal matters to investors: balance sheet first, growth second

For Diageo shareholders, the headline number is the $2.3bn of net cash proceeds. It directly addresses a core market narrative around the company in 2025: how to balance debt reduction, dividends, and the investment needed to reignite growth.

A Reuters analysis last month summed up the strategic dilemma neatly—Diageo’s incoming CEO, former Tesco boss Dave Lewis, is expected by investors to prioritise cost reductions and asset disposals to improve financial flexibility, particularly given leverage concerns and a tougher industry backdrop. ^[13]

Today’s EABL agreement is also notable because it fits a broader pattern in Africa. Diageo has increasingly moved toward an “asset-light” beer model in some markets—keeping brand ownership and licensing economics while stepping away from capital-intensive ownership structures. For example, Diageo announced and later completed the sale of its majority stake in Guinness Ghana Breweries to Castel Group while retaining ownership of key brands under licensing arrangements. ^[14]

The big takeaway: the EABL deal is not simply an “exit” from Africa—it is a shift in how Diageo wants exposure to the region.

The “buy more Diageo shares near £16?” debate just got new fuel

Recent UK market commentary has focused on a deceptively simple question: if Diageo shares are down so far, does that automatically make them attractive? Today’s news adds a new dimension because it gives investors something tangible—cash, deleveraging and portfolio simplification—rather than waiting purely on a demand recovery.

Here’s how the bull and bear cases look after the Asahi announcement.

The bull case: quality brands, licensing leverage, and a valuation that looks “cheaper”

Supporters of the bull case point to three pillars:

Strong global brands that still travel
Diageo remains one of the world’s best-known spirits companies, with premium franchises across whisky, vodka, tequila, gin—and Guinness in beer. The EABL structure is designed so Diageo can keep monetising brands in East Africa through long-term licensing and distribution frameworks, even without controlling the local listed company. ^[15]
Cash generation and shareholder income
With the share price down, the dividend yield looks materially higher than it did during the boom years. Major UK market data showed Diageo’s yield around the mid‑4% range on December 17. ^[16]
“Low-teens” valuation arguments
Depending on the provider and methodology, Diageo’s P/E ratio is being quoted very differently right now. For example, one UK platform showed a P/E ratio around 13.76 on December 17, while other market data providers show low‑20s on a trailing basis—differences that can reflect how “earnings” are defined (fiscal year vs trailing twelve months vs adjusted measures). ^[17]

That spread itself has become part of the discussion: bargain hunters tend to cite the low‑teens figure, while sceptics argue the higher trailing multiple is more realistic given slower growth.

The bear case: demand headwinds, tariffs, and the risk that “cheap” becomes “cheaper”

Sceptics aren’t disputing that Diageo is a high-quality business. The pushback is about timing—and whether the company’s challenges are cyclical, structural, or both.

Consumer demand softness: Reuters has reported that Diageo’s sales have been pressured in key markets, particularly the US and China, and that the company has been trying to cut costs and sell assets amid a cooling post‑pandemic demand environment. ^[18]
Tariff uncertainty: Reuters also highlighted tariff risk in the US (Diageo’s biggest market) as a current strategic headache for management. ^[19]
Debt vs dividend tension: Analysts cited by Reuters have discussed the possibility that protecting the balance sheet could eventually require tougher choices around shareholder returns, even if a cut is not the base case. ^[20]

In short: today’s deal can reduce leverage, but it does not automatically fix the fundamental question of when US and China spirits demand normalises—or how quickly younger consumers return to spirits at premium price points.

What investors should watch next: the timeline to a real “turnaround”

The EABL sale is a headline-grabbing move, but its impact will unfold over quarters, not days.

Here are the practical next milestones investors will likely track:

Regulatory process and completion risk: The deal is expected to close in H2 2026, which means investors will watch for regulatory progress and any changes to the timeline. ^[21]
Use of proceeds: Will Diageo prioritise debt reduction, buybacks, or both? The company has framed the disposal as strengthening the balance sheet, but markets will want detail on capital allocation. ^[22]
New CEO strategy: Dave Lewis is due to take over in January, and investors have been waiting for a clear, decisive plan that goes beyond cost cutting—especially around brand investment, portfolio focus, and market execution. ^[23]
Next major results date: Diageo’s investor calendar lists interim results for the six months ending 31 December 2025 on 25 February 2026—a key checkpoint for guidance, margins, and the post‑deal strategy narrative. ^[24]

Bottom line: is Diageo a turnaround stock or a long-term compounder on sale?

Diageo’s $2.3bn Asahi deal is the most concrete “action item” investors have seen in a while: it brings in cash, reduces leverage, and reshapes the group’s footprint in East Africa without abandoning brands like Guinness in the region.

But the bigger investment call—whether buying more shares around £16–£17 is brave or reckless—still depends on what happens in the next phase: demand recovery in core markets, execution under a new CEO, and whether Diageo can protect margins while rebuilding volume growth.

For now, the market has a fresh headline and a clearer narrative: Diageo is moving from “talking about portfolio options” to actually doing deals. Whether that’s the start of a durable re-rating—or just a short-lived relief rally—will become clearer as the company heads toward February’s results and the long runway to deal completion in 2026. ^[25]