British multinational company Diageo Plc has agreed to sell its entire 65 percent stake in East African Breweries Limited (EABL) and its holding in the spirits maker UDV Kenya to Japanese beverage firm Asahi Group Holdings in a deal worth $2.3 billion (Sh296.6 billion), net of tax and transaction costs.

Asahi will take full control of Diageo Kenya Limited, the investment vehicle through which the British firm holds the EABL stake. Asahi will also takes ownership of Diageo’s 53.68 percent holding in UDV Kenya. EABL owns the remaining UDV Kenya stake and also has management control of the unit.

The deal is subject to regulatory approval.

Earlier this year Nik Jhangiani, Diageo’s interim chief executive, said the company was planning significant divestments to help reduce its debt burden. The drinks maker has been hit by falling alcohol demand and US President Donald Trump’s trade tariffs.

In a statement on Wednesday, Jhangiani said: “This transaction delivers both significant value for Diageo shareholders and accelerates our commitment to strengthen our balance sheet.”

Asahi will pay approximately $3bn for the deal, acquiring Diageo’s 100 per cent stake in Diageo Kenya for $2.35bn and a 53.8 per cent stake in UDVK, Diageo’s local distiller, for $646mn. The two stakes together make up 65 per cent of EABL. After tax and deal costs, Diageo will receive $2.3bn.

The Japanese group, which is recovering from a cyber attack, said in a statement that it expected EABL to remain listed on the Kenya, Uganda and Tanzania stock exchanges once the deal is complete.

Asahi said the deal would give it “a leading platform in Kenya and the east African market, which is expected to deliver long-term growth driven by population increase and economic expansion”.

The company added that the business had “a rich brand portfolio, including beer brands such as Senator, Chrome and Kenya Cane”.

The companies also planned to enter into long-term licences for Diageo’s global brands, such as Guinness and Smirnoff Ice, the Asahi said.

The previously state-owned EABL is the largest drinks player in Kenya, holding approximately 80 per cent share of the country’s alcohol market.

The company brews local beers such as Tusker and Serengeti for its core markets in Kenya, Uganda and Tanzania, as well as distributing Diageo spirit brands across the region.

Diageo has been offloading its African beer production assets but retaining licensing agreements in order to reduce its exposure to currency volatility on the continent and to boost its margins.

The drinks maker sold its Ethiopia and Cameroon businesses in 2022, Nigeria in 2024 and Ghana in January 2025.

Last month, Diageo announced the appointment of former Tesco boss Sir Dave Lewis as chief executive, starting in January. The deal with Asahi is likely to assuage fears among investors that Lewis will cut dividends in order to accelerate debt reduction, as he did when boss of Tesco, said Ed Mundy, analyst at Jefferies.

“Whilst major moves such as a disposal of the 34 per cent stake in [Moët Hennessy] or the total Guinness business are off the table, we would expect some further portfolio pruning,” Mundy said.