ABF, the owner of Kingsmill, has announced it is engaging in discussions for a merger with Hovis, potentially creating the largest bread manufacturer in the º£½ÇÊÓƵ.
Citing a "very challenging" market, ABF highlighted that increased wheat costs and declining demand for calorie-dense products such as bread have squeezed profitability in recent times, as reported by .
In late April, ABF reported an operating loss for its Allied Bakeries division, which is responsible for Kingsmill offerings.
Following a varied performance in its overall first-half results, the firm's share price dropped by eight percent.
Should the merger go ahead, it would bring together two historic British food brands. However, due to the potential size of the new entity, it might attract scrutiny from the Competition and Markets Authority.
Allied Bakeries traces its roots back to 1935 when it was established by Willard Garfield Weston. Meanwhile, Hovis has been a recognizable name since its inception in Stoke-On-Trent in 1890.
Initially starting as Allied Bakeries, the company later merged with Weston Foods in 1939 and was rebranded as Associated British Foods in 1960.
While a merger is on the table for ABF regarding Allied Bakeries, the firm is also contemplating other options such as a joint venture which could integrate the distribution networks of both Hovis and Kingsmill, as reported by Sky News.
The latest semi-annual financial figures for ABF saw a revenue decrease of two per cent, from £9.7 billion to £9.5 billion.
Operating profit took a significant hit, plunging by 24 percent from £931 million to £710 million, alongside a decline in profit before tax by 10 percent, dropping from £911 million to £818 million.
Associated British Foods (ABF) holds a diverse portfolio of brands, including Primark, Twinings Ovaltine and British Sugar.
