Associated British Foods’ (ABF) proposed acquisition of bread giant Hovis has been cleared by the Competition and Markets Authority (CMA).
In a final report published this morning (16 June), the CMA’s independent inquiry group found that ABF subsidiary Allied Bakeries – which manufactures bread brands Kingsmill, Allinson’s, and Sunblest – would exit the UK market entirely if the deal didn’t go ahead.
This means the competition pressure from Allied would be lost, with or without the merger, and therefore does not raise competition concerns, it added.
The final decision concludes a nine-month-long investigation that began last September and was fast-tracked to phase 2 in January. Whilst provisionally finding that blocking the transaction would cause Allied to cease operations in Great Britain, the government watchdog raised competition concerns about the supply of bread and certain other bakery products like pancakes and farls in Northern Ireland.
It subsequently made a U-turn, deciding that ABF does not need to sell or close its NI bakery business. The final report confirmed its view that the anticipated acquisition of Hovis may not be expected to result in a substantial lessening of competition in UK bakery supply.
The inquiry group is said to have heard that bread suppliers in the UK have faced longstanding challenges, including declining demand and significant increases in costs. Evidence gathered during the investigation showed that Hovis and Allied Bakeries have each faced financial challenges – with the latter making significant losses over the last 14 years despite exploring a range of options to improve performance.
“Bread is a basic staple for millions of people, which is why it is important we looked carefully at this deal and assessed the competition implications for households across the UK,” commented Cyrus Mehta, chair of the inquiry group.
“On the basis of the wide range of evidence we received, which showed the difficult position many UK-based bakeries are in, we found Allied Bakeries – owned by ABF – would likely leave the market entirely if the deal did not proceed. Taking that into account, we have concluded the deal does not raise competition concerns,” he added.
Financial details of the acquisition have yet to be revealed.
A spokesperson for ABF said: “We welcome the unconditional clearance provided by the CMA and we will now work on next steps towards completion.
“Combining with Hovis enables Allied Bakeries to continue operating as well as drive significant synergies to create a sustainably profitable UK bakeries business over the long term that is better placed to compete and establish a platform for product innovation.
“As the CMA found, demand for packaged, sliced bread has reduced significantly due to changing consumer tastes and the bread market faces a difficult economic backdrop. However, we believe the market for nutritious, good value staples remains significant and this business can create value for shareholders, provide greater choice for consumers, increase efficiencies for customers and support the wider UK economy,” added the ABF spokesperson.
Hovis is owned by private equity firm Endless LLP, which bought the 140-year-old brand from Gores Group and Premier Foods in 2020. It operates eight bakeries, a flour mill, and three distribution centres across the UK (one of the bakeries is in Belfast). Most recent accounts for the 52 weeks ended 28 September 2024 showed operating losses had almost doubled to £6.9m with an 8% drop in sales.
Allied Bakeries has eight bakeries and six distribution depots in the UK. Two of the manufacturing sites and two of the distribution centres are in Northern Ireland, where it also has a flour mill. Sales of its flagship bread brand Kingsmill plummeted 31.5% during the 52 weeks to 6 September 2025 [NIQ data], resulting in it ceding third place in the UK rankings to Jason’s Sourdough.
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