Associated British Foods (ABF), the owner of Kingsmill, has agreed to buy Hovis in a deal that is thought to be worth over £70m, which – if authorised by the Competition and Markets Authority – would make it the UK’s the UK’s biggest bread brand.
The deal is expected to save £55m between the companies, which have been struggling during the rising costs of raw materials, energy rises and employee costs.
ABF, which also owns Primark, Ryvita and Twinings, has said it by cutting costs it could make two loss-making businesses profitable.
Warburtons is currently the market leader bread brand in the UK, but should the deal go through it would give the Hovis/Kingsmill brand a 41% share, overtaking Warburtons’ 34%.
Bread sales are thought to have dropped due to a lack of demand for basic pre-packaged bread, as speciality breads took a bigger slice of the market.
The move to more high-protein and less carbohydrate diets has also contributed.
Hovis, which was founded in 1890, was bought by Endless in 2020 from Premier Foods, which owns the Mr Kipling brand.
ABF said the deal would lead to “significant costs synergies and efficiencies” in an effort to create a sustainably profitable bread business.
George Weston, chief executive of ABF said: “This solution will create value for shareholders, provide greater choice for consumers and increase efficiencies for customers.”
Hovis has experienced a drop in sales by almost 9% to £447m in the year to 28 September 2024, ABF’s bakery division, Allied Bakeries – which includes Kingsmill, Allinson’s and Sunblest – incurs annual losses of about £30m despite sales of about £400m, according to analysts at Panmure Liberum
According to Companies House, any merger was ‘unlikely to be concluded’ before September 2026.
