The owner of Kingsmill is reportedly nearing a £70 million deal to acquire rival bread brand Hovis.
Sky News reports that Associated British Foods, owner of Kingsmill’s parent company Allied Bakeries, could finalise the purchase of Hovis from private equity firm Endless LLP “within the next week.”
Sources told the news outlet that although a formal merger of the brands is imminent, the deal’s “complexity” means the timeline remains uncertain.
In May, a spokesperson for Associated British Foods confirmed that the group was in discussions with Endless LLP regarding a potential deal but declined to provide details about the transaction’s structure.
The company also highlighted the challenging conditions currently facing the bakery sector.
“We are evaluating strategic options for Allied Bakeries against this backdrop and we remain committed to increasing long-term shareholder value,” the spokesperson added.
Endless owns brands such as Bright Blue Foods, Karnova, and West Cornwall Pasty Co, and acquired Hovis from Gores Group and Premier Foods in November 2020.
In a statement released with Hovis’ 2024 results, the brand’s directors confirmed that discussions were underway.
“At the present time these discussions are ongoing, no formal Sale and Purchase agreement has been signed and the completion of any transaction is expected to be subject to UK regulatory processes,” the statement said.
When asked about the potential impact of the merger on workers, Sarah Woolley, general secretary of the Bakers, Food and Allied Workers Union (BFAWU), expressed disappointment that information was leaked before employees had been properly informed.
“We continue to be open to conversations and look forward to getting the whole picture once an agreement is finalised so that we can look at next steps to protect our members in both companies going forwards,” Woolley added.
Regarding the broader implications of the deal, Mark Field, CEO of the food-focused Prof Consulting Group, said: “The latest speculation about the acquisition, which would unite two of the UK’s most recognisable and trusted bread brands—Hovis and Kingsmill—is, in my view, a strong strategic move.”
“In addition to the clear benefits in market share growth, with the two businesses so closely aligned I would expect there to be significant efficiencies from procurement and packaging through to operations, range rationalisation and sales that would be unlocked initially, critical to drive long term competitiveness and further market share gains.”