| Updated:
The owners of two of Britain’s biggest bread producers – Hovis and Kingsmill – are reportedly in discussions regarding a merger between the two firms as challenges deepen for the market.
Associated British Foods (ABF), the owner of Kingsmill’s parent company Allied Bakeries, and investment firm Endless, which owns Hovis, are in talks about a combination of the two business, as reported by Sky News.
Talks were said to be ongoing but with no deal finalised, according to Sky. One potential outcome could see the acquisition of Hovis by ABF, but specific details are still being outlined.
Both firms are understood to be working with bankers on a potential transaction.
The merger, if completed, would combine two of Britain’s longest-established food brands.
Allied Bakeries was founded in 1935 by Wilard Garfield Weston. Meanwhile, Hovis was created in 1890.
Jon Jenkins, Hovis’ current chief executive, is a former boss of Allied.
Bread industry faces struggles
Inflation-inflicted struggles have weighed on breadmakers, along with competition from speciality producers.
The surge in popularity of low-carb diets have also damaged the bread industry’s financial health in recent years.
ABF, the FTSE 100 giant that also owns Primark, said during its interim results this week that Allied Bakeries had struggled in a “very challenging market.”
“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 soared on the back of the Russia and Ukraine war. Hovis cited these inflationary pressures in its most recent set of accounts filed at Companies House last year.
Warbutons, the family-owned bakery giant, is estimated to have a 34 per cent share of the branded wrapped slice bread sector in the UK, industry experts told Sky.
Hovis is understood to have 24 per cent, whilst Allied has 17 per cent. A merger between the pair would propel them to the largest market segment share, which could catch the eye of the Competition and Markets Authority.
