Associated British Foods (ABF), the parent company of Kingsmill, has confirmed it is in discussions with the owner of Hovis in a merger deal.
This move comes as Allied Bakeries continues to navigate a challenging market environment.
ABF stated on Tuesday that it is “evaluating strategic options for Allied Bakeries” against this challenging backdrop and remains “committed to increasing long-term shareholder value.”
Endless LLP, the private equity owner of Hovis, has been in negotiations with ABF, with a potential merger between two of the UK’s most iconic bread brands, Kingsmill and Hovis.
Such a deal could potentially draw the attention of competition regulators. The bread industry has faced significant headwinds in recent years, grappling with high inflation and evolving consumer preferences, impacting sales figures across the sector.
The potential combination of Kingsmill and Hovis under the same ownership could represent a significant shift in the UK bread market.
Allied Bakeries was founded in 1935, and also owns the Allinson’s and Sunblest brands, with bakeries and depots stretching from Glasgow to London.
Hovis, which was founded in 1890, was bought by Endless in 2020 from Premier Foods, which owns the Mr Kipling brand.
The deal would likely attract the attention of the Competition and Markets Authority (CMA), as it would combine two of the biggest bread makers in the country behind the market leader, Warburtons.
However, the CMA is under its own scrutiny from the Government, which earlier this year removed chairman Marcus Bokkerink as part of a bid to make it more focused on promoting economic growth.
