Key facts
- The Competition and Markets Authority (CMA) has cleared Associated British Foods' (ABF) £75 million takeover of Hovis.
- The CMA determined that ABF's UK bakery arm, Allied Bakeries, would likely exit the market entirely if the deal did not proceed.
- The acquisition will create the UK's largest bread brand.
- Hovis reported pre-tax losses of £4.7 million for the year ending September 28, 2024.
Associated British Foods (ABF) has received unconditional clearance from the UK's Competition and Markets Authority (CMA) for its £75 million takeover of Hovis, a deal that will establish the UK's largest bread brand. The watchdog's decision hinges on the conclusion that ABF's UK bakery arm, Allied Bakeries, would likely exit the market entirely if the acquisition did not proceed. This scenario, the CMA stated, would particularly impact lower-income consumers who rely on bread as a basic staple.
ABF's Allied Bakeries, which owns brands such as Kingsmill, Allinson's, and Sunblest, supplies bread and other baked goods nationwide and to major supermarkets. However, the company has faced challenges including declining demand for sliced bread, a shift towards lower-margin private-label products, and increased operational costs. Hovis, acquired by private equity firm Endless in 2020, also owns the Mother's Pride and Ormo brands and reported pre-tax losses of £4.7 million for the year ending September 28, 2024.
Cyrus Mehta, chair of the CMA's independent inquiry group, emphasized the importance of carefully assessing the deal given bread's status as a staple. He noted that evidence indicated Allied Bakeries' likely market exit without the acquisition, leading to the conclusion that the deal would not harm competition.