Associated British Foods (ABF) has received regulatory approval for its £75m acquisition of Hovis, paving the way for the creation of the UK's largest bread brand.
ABF has been cleared to purchase Hovis after the competition watchdog concluded that the foods giant would likely withdraw from the bakery sector in Great Britain and Northern Ireland if the deal fell through.
The Competition and Markets Authority (CMA) confirmed on Tuesday that the takeover raises no competition concerns.
The ruling represents a significant victory for the London-listed conglomerate, whose food divisions are set to take centre stage once it separates from Primark, the fast-fashion retailer it has owned since 1969.
ABF, which owns the Kingsmill brand, supplies bread and other baked goods throughout the UK, as reported by City AM. Its UK-based arm, Allied Bakeries (AB), and Hovis are key suppliers of own-label bakery products to major supermarket chains.
First proposed in August last year, the acquisition was formally scrutinised by the competition regulator in December amid concerns over the group's potential dominance of the bread market should the deal proceed.
The investigation revealed that bread suppliers across the UK have faced persistent challenges, including falling consumer demand, growing appetite for lower-margin supermarket own-brand bread, and substantial cost increases. Cyrus Mehta, chair of the investigation into the merger, said the deal "does not raise competition concerns" because Allied Bakeries "would likely leave the market entirely" if the deal was blocked.
He said: "Bread is a basic staple for millions of people, which is why it is important we looked carefully at this deal and assessed the competition implications for households across the UK."
ABF's turnover fell by nine per cent to £9.5bn in the six months to the end of February, according to its latest results. Hovis likewise reported an eight per cent decline in revenue to £440m in the year to September 2024.
A spokesperson for ABF said: "We welcome the unconditional clearance provided by the CMA and we will now work on 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," they said.
ABF was established by W. Garfield Weston in 1935 as Food Investments Limited, before floating on the London Stock Exchange in 1994. In April, the company – which is controlled by the billionaire Weston family – announced it plans to separate Primark in an "important step in the evolution" of the group.
Hovis has sites across the UK, including in Avonmouth, Wellingborough, Nottingham, Golborne near Wigan, and Bradford. Allied Bakeries also has bakeries and depots across the country, including in Cardiff, Stoke-on-Trent, West Bromwich, Lincoln, Stockport, Liverpool and Gateshead.
