Kenya’s competition regulator has approved Diageo’s $2.3 billion sale of its 65% stake in East African Breweries Plc to Asahi Group Holdings Ltd., clearing a major hurdle for the Japanese beverage company’s entry into Africa.

The Competition Authority of Kenya approved the transaction subject to conditions designed to protect creditors, business partners and competition in the country’s beer and cider markets.

Kenya sets conditions for EABL deal

Under the approval, EABL must reserve sufficient funds from the transaction proceeds to settle outstanding liabilities that may arise before completion of the deal, according to the regulator’s decision.

The authority also ordered EABL to reserve 20% of cooler space in retail outlets for competing beverages, a measure intended to preserve competition in Kenya’s alcohol market.

The approval follows scrutiny of the deal’s potential impact on the production, distribution and retail of beer and cider, as well as the supply of malt and brewing grains.

Several court petitions, including claims involving a distributor, construction contractor and minority shareholders, had sought to delay or block the transaction. Both Diageo and EABL welcomed the regulator’s decision and said they remain focused on completing the transaction.

Asahi expands into African beer market

Founded in Kenya in 1922, East African Breweries Plc is one of East Africa’s largest beer and spirits producers, with operations spanning Kenya, Uganda and Tanzania. Its breweries, distilleries and regional distribution network support a portfolio of brands serving consumers across East Africa.

For Diageo, the transaction forms part of a broader retreat from African operations. The British drinks company has already sold businesses in Nigeria, Seychelles, Ghana, Cameroon and Ethiopia.

Diageo, headquartered in London, was formed in 1997 through the merger of Guinness and Grand Metropolitan. The company operates in more than 180 countries, employs about 30,000 people and is listed on the London Stock Exchange and New York Stock Exchange.

Asahi Group Holdings, headquartered in Tokyo, was established in 1889 as Asahi Breweries and became a holding company in 2011. Led by CEO Atsushi Katsuki, it employs more than 28,000 people and operates across alcoholic beverages, soft drinks, food and international markets.

The EABL acquisition would give Asahi its first direct operating presence in Africa, strengthening its international expansion while marking another significant step in Diageo’s reshaping of its African portfolio.