Diageo has agreed to buy out SABMiller's 20 per cent stake in its Kenyan unit for 19.5bn Kenyan shillings (£137m) through its East African Breweries unit.
As part of a wider deal to undo their reciprocal marketing ties Diageo is to also sell its own 20 per cent stake in neighbouring Tanzania Breweries through a public offer.
East African Breweries and SABMiller entered a deal some 10 years ago that allowed SABMiller to sell EAB brands such as Tusker beer through Tanzania Breweries in Tanzania, with EAB reciprocating and brewing and marketing SABMiller products such as Castle Lager in Kenya.
In late 2010, EAB acquired a 51 per cent stake in another Tanzanian brewer, Serengeti Breweries, at a cost of $60m.
The brewer says the Kenya Breweries plant has a total brewing capacity of 2,500,000 hectolitres per year.