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ABF Confirms Talks to Combine Kingsmill with Hovis in Potential Bread Market Shake-Up

Associated British Foods is exploring a possible merger with Hovis owner Endless LLP as both brands face financial strain and shifting consumer habits.

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Bakeries have been among the hardest-hit businesses as they use energy-intensive manufacturing processes

Overview

  • Associated British Foods (ABF) has confirmed discussions with Endless LLP regarding a potential merger of Allied Bakeries, which includes Kingsmill, with Hovis.
  • The proposed merger would unite two of the UK's largest bread brands, Kingsmill and Hovis, under one ownership, creating significant consolidation in the bakery industry.
  • Both companies have struggled with declining bread sales due to inflation, low-carb diet trends, and backlash against ultra-processed foods, prompting cost-saving considerations.
  • Analysts suggest a 'merger of equals' with additional investment could unlock operational efficiencies, though no deal terms have been finalized.
  • The Competition and Markets Authority is expected to closely review the merger due to its potential impact on market competition, particularly with Warburtons as the leading bread producer.