Historic bread makers Hovis and Kingsmill are poised for a landmark merger, with their respective owners expected to seal the deal following months of negotiations.
Kingsmill's parent company Allied Bakeries, which falls under London-listed Associated British Foods (ABF), alongside Hovis could reap annual cost savings of up to £50m through the proposed union, as reported by .
According to Sky News, the mooted arrangement would see ABF snap up Hovis for £75m.
This would wrest control of the bread manufacturer from private equity owners Endless, culminating months of talks between the investment firm and ABF.
Industry insiders suggest a formal agreement could materialise by the close of next week, though sources cautioned Sky about pinning down exact timelines given the deal's intricate nature.
If proceedings unfold as anticipated, the merger would bring together two of Britain's most venerable bread manufacturers under a single banner.
Allied Bakeries traces its roots to 1935 when William Garfield Weston established the company, whilst Hovis boasts even deeper heritage dating to the late 1800s when Herbert Grime claimed a £25 prize for devising the brand name from "Hominis Vis" – Latin for "strength of man."
Kingsmill and Hovis hoping to rise with merger
The º£½ÇÊÓƵ bakery sector commands roughly £5bn in yearly turnover, yet has endured significant pressures from soaring costs, niche rivals and evolving shopping patterns over the past decade.
Rising enthusiasm for low-carbohydrate eating plans has further battered the bread industry's bottom line in recent times. ABF, the FTSE 100 conglomerate that owns Primark, reported in its May interim results that Allied Bakeries was contending with a "very challenging market."
The company stated: "We are evaluating strategic options for Allied Bakeries against this backdrop and we expect to provide an update in [the second half of] 2025."
Wheat and flour prices have skyrocketed due to the conflict between Russia and Ukraine. Hovis has pointed to these inflationary pressures in its latest accounts submitted to Companies House.
It is understood that Hovis holds a 24 per cent market share, while Allied commands 17 per cent. A merger would see them leapfrog Warburton's 34 per cent to become the market leader.
Such a move could attract scrutiny from the Competition and Markets Authority (CMA), especially at a time when economic regulators are under government pressure to "regulate for growth".
In a notable development this January, CMA chair Marcus Bokkerink was compelled to resign by Business Secretary Jonathan Reynolds, as ministers pushed forward with their pro-growth agenda.
Legal experts have labelled this action as the "most overtly political" regulatory intervention in recent memory.
