Baking giants Hovis and Kingsmill in discussion for potential merger.
In the bustling world of British bread production, giants Hovis and Kingsmill—two household names—are rumored to be considering a merger. According to Sky News, their parent companies, Associated British Foods (ABF) and Endless, have been in talks, although there's no deal on the table just yet.
If a deal were to go through, Hovis might become part of ABF, who owns Kingsmill's parent company Allied Bakeries. Insiders are tight-lipped about the specifics, but bankers from both firms are reportedly working on potential transaction details.
Originating back in 1890, Hovis, and Allied Bakeries, established in 1935, would combine two of the UK's oldest food brands. Their union might intrigue the Competition and Markets Authority due to their substantial market segment share.
Both companies have been feeling the heat from inflation, competition, and shifting consumer preferences. The rise of low-carb diets and the struggle to stay afloat in a challenging market have taken a toll.
ABF, with its brands like Primark, acknowledged Allied Bakeries' struggles during its interim results this week. They plan to outline their strategic options for Allied Bakeries in the latter half of the year.
Higher wheat and flour prices—a result of the Russia-Ukraine conflict—were a worry for Hovis, as revealed in their latest account filings. Another big player, Warbutons, dominates the branded wrapped slice bread sector with a 34% share. Hovis trails close behind with 24%, while Allied holds 17%. A marriage between the duo could propel them to the market's top bracket.
In simpler terms, if Hovis and Kingsmill join forces, they might become a powerful force in the bread market. Of course, there are regulatory considerations, as their combined market share could raise eyebrows. Stay tuned for updates later this year.
[1] The Telegraph. (2021, November 8). Sky News. Retrieved May 3, 2025, from https://www.telegraph.co.uk/business/2021/11/08/hovis-owners-plot-deal-kingsmill-parent-allied-bakeries/[2] Associated British Foods. (2025, May 3). Interim Results for the 26 Weeks to 26th March 2025. Retrieved May 3, 2025, from https://www.abfoods.co.uk/-/media/files/stakeholders/investors/annual-reports/investor-centre/results/reports--full-reports-and-results/2025/abf-interim-results-report-3may2025/abf-interim-results-report-3may2025.pdf
- The merger discussions between Hovis and Kingsmill, if successful, could see Hovis becoming part of ABF, the parent company of Allied Bakeries, the company that owns Kingsmill.
- Bankers from both Hovis and ABF are working diligently on transaction details for the potential merger, but as of now, there is no deal in place.
- If the merger goes through, it would combine two of the UK's oldest food brands - Hovis, founded in 1890, and Allied Bakeries, established in 1935 - creating a formidable presence in the British bread production industry.
- Both Hovis and Kingsmill have been experiencing pressures from various quarters, including inflation, competition, and shifting consumer preferences, with an uptick in low-carb diets contributing to the challenges.
- ABF, the company behind brands like Primark, is presently assessing their strategic options for Allied Bakeries, having acknowledged the struggles of their bread manufacturing arm during their recent interim results.
