The UK competition watchdog has escalated its investigation into the £75m takeover of Hovis by Associated British Foods (ABF), the owner of Kingsmill and Primark. The Competition and Markets Authority (CMA) has launched a phase 2 inquiry to assess whether the deal could reduce choice and raise prices for consumers.
ABF confirmed plans to buy Hovis from private equity firm Endless in August, combining the UK's second and third largest bread brands. The companies requested a fast-track review, which the CMA granted. ABF stated: 'Our priority is to achieve regulatory clearance as efficiently as possible and we are pleased to have agreed with the CMA that we will fast-track to the in-depth and detailed final phase of their merger review.'
The announcement coincided with a profit warning from ABF, which said adjusted operating profit for the wider group would be below last year. Shares fell by as much as 11% on Thursday. The group cited weak consumer confidence in the UK and Europe, particularly affecting Primark, where sales were lower than expected over the past four months.
The CMA's investigation is expected to run until at least the end of June, but Hovis directors have indicated the deal is 'unlikely to be concluded' before September 2026. The regulator will examine whether the merged entity faces sufficient competition from supermarkets' own labels and Warburtons, the market leader. ABF chief executive George Weston noted: 'In a challenging consumer environment, our focus is on factors within our control.'
