Hovis owner agrees sale to ABF to create ’profitable UK bread business’
Hovis Group will be bought over by Kingsmill owner, Associated British Foods (ABF), it has been revealed.
The move follows months of negotiations after it had been confirmed that ABF, owner of Allied Bakeries, were in discussions with Hovis owners, Endless LLP.
Subject to regulatory review by the Competition and Markets Authority (CMA), the proposed acquisition has been hailed as a “significant step towards creating a more sustainable and efficient bakery operation in the UK”.
It had previously been stated in the interim results that ABF had been “evaluating a range of strategic options for Allied Bakeries”. Profitability at Allied Bakeries has been increasingly challenged in recent years by a decline in demand for pre-sliced, packaged bread and a loss of scale in Allied Bakeries’ nationwide distribution network serving the major retailers with daily delivery of bread and bakery goods.
In a statement, ABF said the acquisition will combine the production and distribution activities of the two businesses, driving significant costs synergies and efficiencies, to create a profitable UK bread business that is sustainable over the long-term.
“The combined business will be better placed to compete effectively and to establish a stable platform for product innovation in the segments of the UK bakery category that are growing as a result of changing consumer tastes and needs,” said the statement.
“This will include improvement in existing products and expansion into new product ranges.”
George Weston, Chief Executive of ABF said: “Supporting the Hovis and Kingsmill brands with well-invested and efficient operations will also enable innovation and growth. This solution will create value for shareholders, provide greater choice for consumers and increase efficiencies for customers.”
Aidan Robson, Managing Partner of Endless LLP added: “We are proud of the journey we’ve shared with Hovis to date, supporting this historic brand in a highly competitive and challenging market.
“The transaction with ABF represents an opportunity to create a platform for long-term sustainability in the bakery sector for the benefit of retailers and consumers.
“While we work towards achieving CMA clearance of the transaction, our focus remains on Hovis to continue delivering exceptional products and services to its customers.”
It is anticipated that the CMA approval may take some time, and until regulatory clearance is granted, Hovis Group Ltd and Allied Bakeries will continue to operate as separate entities.
