London, Jan 7, 2026, 09:01 GMT — Regular session
- Diageo shares fall after a Kenyan distributor seeks to block the EABL sale to Asahi
- RBC lifts Diageo to “outperform” with a 2,000p target
- Next catalysts: Nairobi hearing on Jan. 9; Diageo interim results on Feb. 25
Diageo (DGE.L) shares slipped on Wednesday after a Kenyan beer distributor lodged a lawsuit seeking to block the spirits maker’s planned $2.3 billion sale of East African Breweries (EABL) to Japan’s Asahi Holdings. The stock was down 1.4% at 1,620.5 pence by 0900 GMT, after trading between 1,606 and 1,649 pence, and sits about 2.6% above its 52-week low. Diageo did not immediately respond to a request for comment. 1
The court challenge lands as investors weigh Diageo’s push to simplify its portfolio and strengthen its balance sheet. Diageo, maker of Johnnie Walker whisky and Guinness, agreed on Dec. 17 to sell its 65% stake in EABL to Asahi for $2.3 billion, valuing the business at about $4.8 billion, with completion slated for the second half of 2026. “This transaction delivers both significant value for Diageo shareholders and accelerates our commitment to strengthen the balance sheet,” interim chief executive Nik Jhangiani said at the time. 2
Bia Tosha Distributors Ltd, which distributes products for Diageo’s Kenyan unit, asked the court to suspend the share sale until a separate case it filed in 2016 is resolved, according to court documents. “If they succeeded in disposing their only asset in Kenya, we will not be able to execute a judgment against Diageo,” said Ken Kiplagat, a legal representative for Bia Tosha, adding the court had set a hearing for Friday, Jan. 9. 3
The legal headline follows a more upbeat broker call a day earlier. RBC Capital Markets upgraded Diageo to “outperform” from “sector perform” and kept its cash-flow-based price target at 2,000 pence, roughly 23% above the latest price. “We think that reviving the neglected mainstream is the key to Diageo rediscovering sustainable volume growth,” RBC said, while flagging a hit to profitability: it expects margins to fall 210 basis points (2.1 percentage points) in 2027. 4
A recent insider trade has also been in focus as the stock hovers near lows. Diageo said chief commercial officer Dayalan Nayager bought 28,960 shares at £16.04 each on Dec. 30, according to a regulatory announcement. 5
For traders, the near-term question is whether the Kenyan litigation triggers any delay or interim restrictions on the transaction, and whether Diageo addresses the court filing. The deal’s timetable and conditions matter because the sale proceeds underpin part of the group’s plan to reduce leverage and sharpen its focus.
The next scheduled company update is Diageo’s interim results on Feb. 25 for the six months ended Dec. 31. Investors are likely to focus on any refresh to guidance, cash generation and progress on disposals and cost actions. 6
Risks run in both directions. Court action or regulatory hurdles could extend the closing timeline and push back proceeds, while the transaction structure also shifts Diageo’s exposure in East Africa toward long-term licensing and production agreements, which carry execution risk of their own. 7
