Diageo Shares Jump on $2.3bn Asahi Deal: What Today’s Kenya Exit Means for a Turnaround, Dividends and the £16 “Value” Debate

Diageo (LSE: DGE) is back in focus on 17 December 2025 after agreeing to sell its 65% stake in East African Breweries (EABL) to Asahi for $2.3bn. Here’s what the deal means for debt, dividends, and whether the share-price slump since 2022 is finally setting up a recovery. ^[1]

London-listed drinks giant Diageo—the owner of Johnnie Walker and Guinness—has delivered one of its biggest corporate headlines of 2025, agreeing to sell its controlling stake in East African Breweries (EABL) to Japan’s Asahi Group in a transaction expected to generate estimated net proceeds of $2.3 billion after tax and transaction costs. ^[2]

For investors, the significance goes well beyond a single divestment. Diageo shares have spent the past three years sliding from “defensive staple” status into “turnaround watchlist” territory, with the stock now trading around the mid-£16 to £17 area and far below last year’s highs. ^[3]

Today’s deal gives the market something it has been demanding: visible progress on deleveraging—and a clearer signal that Diageo is willing to reshape its portfolio to rebuild confidence. ^[4]

Today’s Diageo news in brief (17 December 2025)

Diageo agreed to sell its 65% stake in EABL (via Diageo Kenya Limited) to Asahi, alongside its stake in the Kenyan spirits business UDVK. ^[5]
The transaction implies a $4.8bn enterprise value for 100% of EABL at ~17x adjusted EBITDA, and is expected to reduce Diageo leverage by ~0.25x. ^[6]
Diageo shares rose after the announcement (Reuters reported +2.3% in early trading). ^[7]
Separately, Irish media reported that six Wetherspoon pubs in Ireland will begin serving Guinness following a deal with Diageo—an attention-grabbing (if smaller) commercial headline tied to the company’s flagship stout. ^[8]

What Diageo actually announced: the Asahi–EABL transaction explained

Diageo said it has entered into an agreement to sell its 100% shareholding in Diageo Kenya Limited, which holds 65% of EABL, to Asahi. The sale also includes Diageo’s shareholding in UDVK, a Kenya-based spirits producer and importer. ^[9]

The headline numbers

Estimated net proceeds:$2.3bn (after tax and transaction costs). ^[10]
Valuation: proceeds equate to ~17x adjusted EBITDA, implying $4.8bn enterprise value for 100% of EABL. ^[11]
Balance sheet impact: expected to de-lever Diageo by ~0.25x. ^[12]
Timing: completion is expected in the second half of calendar year 2026, subject to regulatory approvals. ^[13]

What happens to Guinness and other Diageo brands in East Africa?

Crucially, Diageo isn’t “walking away” from its brands in the region. The company said it will enter long-term licensing agreements with EABL to secure continued production and distribution of Guinness, plus local spirits and ready-to-drink products, and the distribution of Diageo international spirits. ^[14]

Diageo also stated that locally owned EABL brands—such as Tusker and Kenya Cane—will remain owned by EABL. ^[15]

This structure matters for investors because it aligns with an “asset-light” logic: Diageo can keep brand economics (via licensing/distribution arrangements) while freeing capital tied up in a large operating stake. ^[16]

Why this deal matters for Diageo’s turnaround narrative

1) It directly targets the market’s debt and leverage concerns

In its announcement, Diageo explicitly linked the disposal to a plan to return the group to its target leverage range of 2.5x–3.0x and described the sale as a “material” step toward that goal. ^[17]

The Financial Times also framed the sale as part of Diageo’s push to reduce debt, noting the transaction is expected to reduce the net debt-to-earnings ratio by 0.25 times. ^[18]

2) It shows “portfolio action,” not just cost-cutting talk

In recent quarters, Diageo has been battling multiple headwinds—from weaker alcohol demand in some markets to pressure from US tariffs—while investors have looked for tangible steps beyond guidance resets. ^[19]

Selling a major stake in a long-flagged “possible disposal” asset (Reuters notes EABL had been highlighted by analysts as a potential sale target) sends a clear signal: management is willing to make big moves to improve financial flexibility. ^[20]

3) It lands just ahead of a CEO handover

Reuters reported that interim CEO Nik Jhangiani is due to return to the finance chief role in January, when former Tesco chief Dave Lewis takes over as Diageo CEO. ^[21]

A cleaner balance-sheet trajectory and a simplified story can make it easier for a new chief executive to reset strategy—and for investors to believe in it.

Market reaction: Diageo shares rise, but the longer-term chart is still bruised

On the day of the announcement, Reuters reported Diageo shares were up 2.3% in early London trading. ^[22]
Alliance News (via Shares Magazine) reported the stock rose 1.5% to around 1,707p on Wednesday morning. ^[23]

That pop is meaningful—but it doesn’t erase the bigger picture: Diageo shares remain far below prior peaks. MarketWatch noted the stock was still ~35% below its 52-week high (with that high recorded a year earlier). ^[24]

In other words, today’s news looks like a confidence boost—but the investment debate remains: is this a “value entry point” near £16–£17, or a value trap waiting for a clearer earnings recovery?

Dividends: strong yield, but investors want coverage and growth clarity

One reason Diageo keeps appearing in income-focused portfolios is the dividend profile. The company pays dividends twice a year (interim and final). ^[25]

Recent company disclosures set the sterling equivalents at:

Interim dividend:31.48p per ordinary share (paid 24 April 2025). ^[26]
Final dividend:47.91p per ordinary share (paid 4 December 2025). ^[27]

DividendMax currently shows Diageo’s dividend yield around 4.7% (based on prevailing share price). ^[28]

Why the Asahi deal is relevant to dividend investors

Diageo is effectively trading a chunk of operating exposure for cash proceeds and lower leverage. In a high-debt environment, that can help protect dividends indirectly—by reducing financing pressure and giving the company more room to manage cyclical swings.

That said, a high yield can reflect pessimism as much as opportunity. The key question for 2026 is whether Diageo can convert balance-sheet relief into more reliable earnings momentum, rather than simply “stabilising” after asset sales.

The core question: can Diageo’s share price stage a real turnaround?

A Diageo turnaround case usually rests on four pillars:

1) Brand power and premium positioning

Diageo remains one of the best-known premium spirits and beer houses globally, with brands spanning whisky, vodka, rum, tequila, gin and stout. ^[29]

The strategic logic of the EABL sale also reinforces a theme: Diageo wants to keep brand presence (via licensing), while reshaping where it allocates capital. ^[30]

2) Operational discipline and leverage reduction

Diageo is explicitly telling investors it is tightening capital discipline and targeting leverage. The EABL transaction is designed to contribute to that, cutting leverage by roughly 0.25x on completion. ^[31]

3) A reset under new leadership

The Dave Lewis appointment gives the market a clean “chapter break.” The simplest bull case is that Diageo can stabilise US performance, rebuild execution rhythm, and restore credibility on targets. ^[32]

4) Macro headwinds ease—or at least stop worsening

Reuters linked Diageo’s challenges to tariff hikes in the US (its biggest market), high debt levels, and signs that younger consumers may be shifting away from alcohol. ^[33]

Those headwinds don’t vanish because of one divestment. But improving the balance sheet can reduce the damage if demand remains choppy.

Risks and watchpoints investors should track next

Even after today’s headline, the investment case hinges on execution. Here are the key risks the market is likely to focus on:

Regulatory approvals and timing: the deal is expected to close in H2 2026, meaning there’s still a long runway where conditions can change. ^[34]
What Diageo does with the proceeds: the announcement is clear on deleveraging intent, but investors will watch for follow-through, not just messaging. ^[35]
US demand and tariff pressure: Reuters explicitly flagged tariffs and shifting consumption as live issues for Diageo. ^[36]
Earnings quality vs. financial engineering: asset sales can help, but long-term rerating usually requires underlying sales and profit growth to reaccelerate. ^[37]

A smaller Guinness headline today: Wetherspoon Ireland begins serving Guinness

While the Asahi deal is the major market-moving story, Guinness remains central to Diageo’s public profile—and today brought a more “consumer-facing” headline.

Irish media reported that six Wetherspoon pubs in Ireland will begin serving Guinness for the first time, following a deal with Diageo, with pint pricing reported by location. ^[38]

For investors, this isn’t likely to shift forecasts on its own—but it underlines Guinness’ role as a demand driver and a strategic asset in Diageo’s portfolio.

Bottom line for today (17 December 2025)

Diageo’s agreement to sell its EABL stake to Asahi is the clearest “action headline” the company has delivered in months: it is large, cash-generative, and explicitly designed to reduce leverage—exactly where investors have been demanding progress. ^[39]

But one day’s share-price bounce doesn’t equal a completed turnaround. The next phase is about what happens after the announcement: closing the deal, deploying proceeds to strengthen the balance sheet, and—under incoming CEO Dave Lewis—restoring consistent growth in the core markets. ^[40]