The Competition and Markets Authority (CMA) has given the green light to a landmark merger between Associated British Foods (ABF), owner of the Kingsmill brand, and its longtime rival Hovis. The decision, valued at approximately £75 million, will unite 16 bakeries across the UK and create the country's largest bread manufacturer, commanding an estimated 35% share of the overall market.
CMA Fast-Tracks Investigation
The CMA fast-tracked its phase one merger investigation to phase two at the request of both companies. The inquiry group published its decision this week, ahead of a June 24 deadline. It found that if the merger did not proceed, the most likely outcome would be ABF exiting the market entirely in Great Britain and Northern Ireland.
ABF has reported “significant losses” over the past 14 years, driven by declining bread demand, a shift toward lower-margin private-label products, and rising costs for energy, wheat, and distribution. The CMA concluded that these factors would have contributed to ABF's potential exit.
Competition Concerns Addressed
Cyrus Mehta, chair of the independent inquiry group, stated: “Bread is a basic staple for millions of people, which is why we looked carefully at this deal and assessed the competition implications for households across the UK. 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.”
ABF Welcomes Decision
An ABF spokesperson welcomed the clearance: “We appreciate the unconditional clearance provided by the CMA, and we will now work on the 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.”
The spokesperson added: “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.”
The merger will merge the distribution networks of both companies, reshaping the UK bread market. Kingsmill and Hovis products are widely available in supermarkets across the UK, and the combined entity is expected to leverage scale to improve profitability and innovation.
