Associated British Foods (ABF), the FTSE 100 company behind Kingsmill and retailer Primark, has agreed to acquire rival bakery brand Hovis from private equity firm Endless — a move that could create the UK’s largest bread brand if approved by regulators.
The deal, uniting the country’s second- and third-largest bread brands, is expected to attract scrutiny from the Competition and Markets Authority. Both companies have been losing ground to market leader Warburtons. Hovis reported a near 9% fall in revenue to £447 million in the year to 28 September 2024, with pre-tax losses widening to £4.7 million, compared with £3.6 million the year before. This included £530,000 in one-off restructuring costs.
ABF’s bakery arm, Allied Bakeries — which produces Kingsmill, Allinson’s, and Sunblest — also faced challenges, recording an estimated £30 million annual loss last year despite sales of about £400 million, according to broker Panmure Liberum.
ABF said combining the production and distribution operations of Allied Bakeries and Hovis would generate cost savings and efficiencies, creating a profitable and sustainable UK bread business over the long term.
George Weston, ABF chief executive, said:
“This transaction will create a UK bakeries business that is both profitable and sustainable over the long term. Supporting the Hovis and Kingsmill brands with well-invested and efficient operations will also enable innovation and growth. This solution will create value for shareholders, provide greater choice for consumers, and increase efficiencies for customers.”
