Allied Bakeries owner Associated British Foods (ABF) is in discussions with Hovis owner Endless regarding a potential merger between the two bread behemoths.
In a response to media speculation regarding the merger, ABF confirmed today (6 May) that discussions were taking place but noted that “there is no certainty that a transaction will be concluded nor as to the terms of such a transaction”.
It also remains unclear which company was looking to purchase the other.
The news comes as Allied Bakeries – which includes brands Kingsmill, Allinson’s, and Sunblest as well as own label supplier Speedibake – revealed it was ‘evaluating strategic options’ as losses deepened in its interim H1 results.
“Allied Bakeries continues to face a very challenging market,” added the statement. “We are evaluating strategic options for Allied Bakeries against this backdrop and we remain committed to increasing long-term shareholder value. A further announcement will be made as and when appropriate.”
A spokesperson for Hovis said: “We are aware that ABF plc has been in discussions with Endless LLP but we are not able to provide any further detail at this stage.”
The two bread making giants are already connected through Jon Jenkins, the former boss at Allied Bakeries who was appointed CEO of Hovis in October 2022. Jenkins led the bread brand back to profitability in its latest financial results, for the 53 weeks to 30 September 2023, with turnover soaring to £489m.
A proposed merger would form a company with a significant slice of the UK wrapped bread market, and so come under close scrutiny from the Competition and Markets Authority (CMA). NIQ GB Total Coverage data for the 52 w/e 7 September 2024 had Hovis sales valued at £374.3m and Mothers Pride (made by Hovis) at £6.5m, with Kingsmill at £107.6m and Allinson’s at £5.5m. Combining these, however, would still not equal Warburtons sales value of £586.6m.
The CMA may also be considering to block the proposed £4bn merger between food-to-go manufacturers Bakkavor and Greencore, who are currently still finalising terms and conditions after reaching an agreement in principle last month.
Heritage brands
Hovis was acquired by Endless in 2022 from US investment firm Gores Group and Premier Foods. It will celebrate its 140th anniversary next year having been founded in 1886 by Richard ‘Stoney’ Smith, who discovered a way to separate wheatgerm from flour in milling without loss of vitamins or minerals.
Allied Bakeries was established in 1935 by Willard Garfield Weston – his family continues to control ABF with George Weston as chief executive. According to its website, it operates eight bakeries and six designated depots in the UK stretching from Glasgow to London and from Stevenage to Cardiff and over to Belfast. At the end of last year, it strengthened its fleet with 36 new rigid trucks and 32 tractor units.
Hovis also has a bakery site in Belfast, along with Glasgow, Bradford, Golborne, Nottingham, Wellingborough, Avonmouth, and Mitcham.
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