Associated British Foods (ABF) has revealed plans to acquire Hovis Group for approximately ยฃ75 million, equal to around $100 million.
The transaction, still awaiting regulatory approval, could reshape the UKโs bread sector by merging Hovis with ABFโs Allied Bakeries, known for Kingsmill and Allinsonโs.
Such a consolidation has the potential to create the largest bread producer in the country.
Before the deal is finalized, the Competition and Markets Authority (CMA) must review its competitive implications.
Background on the Companies
A closer look at the two businesses reveals why their merger carries weight for the UK food industry.
Both Associated British Foods (ABF) and Hovis Group have long histories in the British market, each holding valuable brand recognition and consumer loyalty.
Yet, evolving dietary habits and economic pressures have forced both to adapt in different ways.
Associated British Foods (ABF)
ABF operates as a multinational conglomerate with a broad portfolio that stretches across retail, grocery, and agriculture.
Its ownership of Allied Bakeries has long placed it in the heart of the bread market, producing household names such as Kingsmill and Allinsonโs.
Alongside bakery operations, ABF owns globally recognized brands like Primark in fashion, Twinings in tea, and Ryvita in healthy snacks.
Despite its reach, the bread division has experienced growing challenges.
Shoppers are increasingly favoring healthier, artisanal bread products over standard packaged loaves.
This change has pressured sales of everyday white and brown bread, historically the core of Allied Bakeries.
In response, ABF has looked for strategic ways to revitalize its bakery division while continuing to lead in household staples and import British food.
Key facts about ABF:
Hovis Group
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Hovis has been a staple of British life since 1890, with its name becoming synonymous with traditional bread.
Generations of families have purchased Hovis loaves, making the brand one of the most recognizable in the market.
Despite this legacy, shifting diets and the popularity of specialty breads weakened its sales base.
In 2020, Endless LLP acquired Hovis from Premier Foods with the goal of turning around its fortunes. Efforts to restore profitability included operational restructuring and targeted marketing campaigns. While these steps stabilized the company, broader market dynamics, such as the decline in packaged bread consumption, limited its growth.
Hovis remains an iconic brand with cultural significance, but without a stronger backing, sustaining competitiveness has been a challenge.
Key facts about Hovis:
Deal Details
News of the acquisition has sparked attention not only for its financial value but also for its potential to reshape the competitive dynamics of the bread industry.
The agreement represents ABFโs commitment to strengthening its presence in a market that continues to evolve rapidly.
ABF has agreed to purchase Hovis Group in a deal valued at approximately ยฃ75 million ($100 million).
Endless LLP, the current owner, will transfer control of the brand to ABFโs Allied Bakeries division.
The deal was announced in August 2025 and is awaiting review by the Competition and Markets Authority (CMA).
Until the CMA provides clearance, Hovis and Allied Bakeries will function as separate entities to ensure continuity for customers and employees.
Deal at a glance:
Strategic Rationale
Mergers in the food sector are often driven by shifting consumer habits and the need for efficiency.
ABFโs acquisition of Hovis is no exception, as it responds to declining demand for packaged bread and the challenge of meeting new dietary expectations.
Market Dynamics
Consumer behavior in the UK bread market has shifted dramatically in recent years.
Standard white and brown packaged loaves no longer dominate shopping baskets in the way they once did.
Growing demand for products like sourdough, ciabatta, and seeded bread has reshaped bakery shelves. Added to this, the popularity of low-carb and high-protein diets has reduced reliance on bread in everyday meals.
These forces have disrupted long-standing market leaders, requiring new strategies for growth and survival.
Benefits for ABF
ABF stands to gain several advantages through consolidation with Hovis.
By combining resources, the company can increase operational efficiency, cut costs, and build stronger bargaining power across supply chains.
Market presence will be enhanced, allowing ABF to compete more effectively with Warburtons, the dominant player in UK bread.
Importantly, the acquisition opens space for product innovation that aligns with consumer health preferences and lifestyle choices.
Strategic benefits for ABF:
Reactions and Concerns
Acquisitions of this size generate mixed responses, balancing optimism for efficiency with caution around job security and market control.
ABF Executive Statement
George Weston, CEO of ABF, emphasized that the acquisition reflects a long-term strategy to provide greater value for shareholders while improving choice for customers.
He highlighted efficiency improvements as a major gain, arguing that combining the strengths of both Allied Bakeries and Hovis would create a more resilient business model.
Weston also noted that growth in the bread market depends on adapting to changing eating habits, and this acquisition provides the resources to drive that adaptation.
Union Response
Unite, representing many workers in the food and bakery sectors, voiced concerns about potential job cuts linked to the consolidation.
The union has demanded involvement in all discussions affecting staff, urging ABF to maintain transparency and protect workersโ rights.
Calls for clarity around integration plans are strong, reflecting the importance of job stability for employees at both Hovis and Kingsmill facilities.
Regulatory Considerations
Regulatory approval is a critical step before the acquisition can proceed.
The Competition and Markets Authority will examine the transaction closely to determine its impact on competition in the UK bread market.
Concerns focus on whether combining two major players could restrict consumer choice or lead to higher prices.
During the review period, Hovis and Allied Bakeries will operate independently, preventing any premature influence on competition.
Until a final decision is reached, both companies are expected to maintain business as usual, safeguarding continuity in production and supply for retailers and households.
Summary
ABFโs acquisition of Hovis represents a significant moment for the UK bread industry.
If approved, the deal could transform the market, giving ABF an opportunity to streamline costs while revamping product offerings to match evolving dietary preferences.
Success will depend on CMA approval and the ability to integrate Hovis without major disruption to employees or customers.
Through consolidation, ABF signals its commitment to reviving its bakery division and competing more forcefully in a rapidly changing sector.
