Associated British Foods (ABF) does not need to sell or close its Northern Irish bakery business before acquiring Hovis, the Competition and Markets Authority (CMA) has ruled.
The CMA inquiry group investigating the deal between the UK bread giants previously found competition concerns in the supply of bread and certain other bakery products like pancakes and farls in Northern Ireland. Divestment of ABF’s bakery business in the NI region was proposed as a remedy to this.
It meanwhile gave clearance for the takeover to proceed in Great Britain after determining that Allied Bakeries – an ABF subsidiary and manufacturer of the Kingsmill, Allinson’s, and Sunblest brands – would be forced to close otherwise.
As phase 2 of the merger enquiry progressed, the CMA received further submissions from Allied Bakeries and undertook additional evidence-gathering including financial data and emails from potential buyers.
In a supplementary interim report published this morning (21 May), the inquiry group has subsequently revised its view to being that Allied Bakeries would likely have to exit both the GB and NI markets if ABF was blocked from acquiring Hovis. It also noted it was unlikely that a purchaser for ABF’s NI bakery business could preserve competition with Hovis.
As a result, the CMA has provisionally concluded the deal will not cause a substantial lessening of competition of bakery supply in both the GB and NI markets.
ABF said it acknowledged the CMA’s report and would continue to work constructively with them to achieve regulatory clearance as efficiently as possible. “This acquisition is the only route to creating a sustainably profitable business that is able to invest in innovation and growth, which will benefit consumers and the wider UK economy,” it added.
Comments from the industry on why this decision shouldn’t become final are invited until 5pm on Thursday 28 May, with the statutory deadline for the merger inquiry set for 24 June 2026.
Several of the comments previously submitted in response to the NI divestment remedy raised concerns, including that it didn’t cover ABF’s flour mill in Belfast and its distribution network. However, one response from ‘retailer B’ noted that should Allied Bakeries cease to trade, it would lead to a lack of capacity in the regional market. “In turn, we anticipate this could then lead to a sharp rise in inflation, ultimately having a negative effect for consumers,” it said.
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