The owner of Kingsmill, Associated British Foods (ABF), has struck an agreement to acquire rival baker Hovis in a deal estimated to be worth £75m. If approved, the merger would create the UK’s biggest bread brand, cementing ABF’s presence in the bakery aisle.
ABF, which also owns Primark, Ryvita and Twinings, said the move was aimed at reviving both Kingsmill and Hovis, which are currently loss-making.
The company told investors the combined business would be “better placed to compete effectively” in the changing bakery market and would focus on cutting costs, improving efficiency and developing new products that reflect shifting consumer tastes.
Hovis, a household name since its founding in 1890, has been under the ownership of private equity firm Endless since 2020, when it was acquired from Premier Foods. Endless helped stabilise the business, but the brand has continued to face challenges amid falling demand for traditional pre-packaged loaves.
Sales of mass-market bread have declined in recent years, with shoppers leaning towards speciality options such as sourdough, ciabatta and seeded varieties. At the same time, some consumers are moving away from bread altogether, turning to higher-protein diets and cutting back on carbohydrates.
Warburtons, currently the market leader in UK breadmaking, would face a stronger rival if the ABF-Hovis merger goes ahead. However, the proposed tie-up will require scrutiny from the Competition and Markets Authority (CMA), given the scale of the deal and its potential impact on market competition.
George Weston, chief executive of ABF, said: “This solution will create value for shareholders, provide greater choice for consumers and increase efficiencies for customers.”
But Unite, the union representing workers at both Kingsmill and Hovis, struck a cautious tone. General secretary Sharon Graham said: “While there is still a long way to go before any buyout happens, Hovis and Kingsmill must ensure that jobs are protected.”
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She added that the union would be fully involved in safeguarding pay, conditions and security of employment across both bakeries.
The merger discussions surfaced three months ago, when ABF’s breadmaking arm Allied Bakeries – which produces Kingsmill and Allinson’s – first confirmed it was exploring a deal. If successful, the transaction would create a new giant in Britain’s bakery sector, reshaping a market long dominated by three national players: Warburtons, Kingsmill and Hovis.
For now, the deal rests on CMA approval and further discussions with unions, but ABF says it is confident that bringing the two historic brands together will set the stage for a sustainable future in breadmaking.
