Leicestershire-based Hampshires has bought Coombs Bakeries, its biggest local competitor, out of administration.
The acquisition means the 106-year old Hampshires chain has increased its estate by 14 shops to a total of 31.
Hampshires’ MD Keith Baxter said: "It would have been a terrible blow to see this Leicestershire icon fall by the wayside and we found it too attractive an opportunity to miss."
He said the deal marked the start of a series of changes to the company. Initially, it will operate both its own and Coombs’ central bakeries.
But Coombs’ bakery site will be extended to house the additional production space and increase in workforce as the existing Hampshires bakery is due for re-development within the next two years.
Baxter said: "These days there is an obsession for high street bake and snack shacks.
The real value of a true baking heritage has almost been forgotten.
But with so much emphasis on wholesome, tasty good food, and we are able to provide exactly that, we are seeking to re-emphasise our traditions."
Guy Coombs, MD of Coombs, commented: "We couldn’t be happier. Keith and I have been good friends for many years and I know my father, John, shares my respect for him."
Coombs, which originally had 19 shops and a central bakery, had been trading in administration since July.
It called in administrators blaming tough trading conditions and market pressures. Five of the shops were shut down.