ABF Buys Hovis For Seventy Million Pounds Creating UKs Biggest Breadmaker

The owner of Kingsmill has struck a landmark deal to acquire rival bread brand Hovis, forming the nation’s largest breadmaker in a move set to generate both opportunities and scrutiny in the sector. Associated British Foods ABF which also owns retail giant Primark and grocery staples such as Twinings is to purchase Hovis Group from Leedsbased private equity firm Endless for roughly £70 million.

This consolidation unites the production and distribution operations of Hovis and Allied Bakeries ABFs bread division at a time when the UK bread market is under mounting pressure. Demand for presliced packaged bread has waned and bakeries have contended with surging energy costs and labour challenges in the wake of the RussiaUkraine conflict. Hovis and Kingsmill currently rank as the UKs second and third biggest bread brands respectively and their combined market share of approximately 40 per cent will nudge them ahead of Warburtons the current leader.

George Weston chief executive of ABF stated that the transaction will create a bakeries business capable of profitable and sustainable longterm operation. The backing of two established brands with robust investment and improved efficiency should provide a foundation for innovation and potential growth. Weston noted that this new conglomerate will deliver increased value for ABF shareholders consumers and retail partners alike.

The merger is anticipated to receive close examination from UK competition authorities due to its dominant market position. However industry analysts consider the deal likely to pass regulatory muster citing continued strong competition and the risk to at least one of the brands’ future without the deal. Precedent from other industries and analyst forecasts suggest approval is within reach especially as the alliance could restore profitability amidst recent double digit millions in operating losses reported by both companies.

Hovis comes with deep heritage its history dating to the 1880s while Allied Bakeries commands a wide footprint through eight bakeries and six distribution depots and also manages brands such as Allinsons and Sunblest. This transaction is expected to unlock considerable efficiencies across production and logistics areas offering potential to rejuvenate a sector buffeted by criticism of processed foods and the popularity of lowcarb diets.

Market reaction was muted with ABF shares ending flat at £2273. Industry watchers will now focus on how the combined entity navigates regulatory hurdles and delivers the promised strategic gains in Britain’s challenging bread marketplace.