Diageo is to sell its stake in East African Breweries Limited to Japan's Asahi Group Holdings in a deal worth $2.3bn, the drinks giant confirmed on Wednesday.
Under the terms of the deal, the owner of Guinness, Johnnie Walker and Smirnoff will sell its 100% holding in Diageo Kenya - which owns 65% of EABL's shares - to Asahi, Japan's largest brewer. Asahi will also acquire a 53.8% stake in Diageo's local distiller UDVK, paying a total of around $3bn.
Net proceeds after tax and costs are likely to come in at $2.3bn, which will be used to pay down debt.
The sale is part of wider turnaround plans by Diageo, which include cutting debt by offloading non-core assets.
The blue chip - which recently named former Tesco boss Dave Lewis as chief executive - is battling falling alcohol sales, US tariffs and an under-pressure share price.
Chief financial officer and interim chief executive Nik Jhangiani said: "This transaction delivers both significant value for Diageo shareholders and accelerates our commitment to strengthen our balance sheet.
"We remain committed to returning the group to well within our target leverage ratio range of 2.5 - 3.0x through disposals of non-strategic, non-core assets."
Diageo will maintain a presence in east Africa through a long-term licensing agreement with EABL as part of the deal, and will continue to produce and distribute Guinness, local spirits and ready-to-drink brands.
Atsushi Katsuki, Asahi chief executive, said: "This business is a high-quality leading company in Kenya, Uganda and Tanzania, with an unrivalled brand portfolio and marketing capabilities."
The acquisition is the first time a major Japanese brewing business has made an investment of this size in an African alcohol beverage firm, Diageo noted. The sale gives EABL an implied enterprise value of $4.8bn.
The deal is set to complete, subject to regulatory approvals, in the second half of 2026.
As at 1100 GMT, shares in Diageo were up 1% at 1,705.15p.