The CMA has been investigating the proposed merger of the two bread businesses and whether it would substantially reduce competition in the supply of bread and baked goods in Northern Ireland and Great Britain.

In the interim report, the CMA states its provisional conclusion is that absent the merger, Associated British Foods (ABF) is likely to exit the Allied Bakeries business in the whole of the UK, however added there is likely to be a purchaser for Allied Bakeries assets in Northern Ireland that would continue to compete with Hovis absent the merger.

It found that the merger between the companies would not substantially reduce competition in Great Britain as competition between the two would be lost with or without the merger. However, they have provisionally found competition concerns in Northern Ireland.

Subsequently, ABF is presently running a sales process for its bakery business here in Northern Ireland, where it remains profitable, unlike the GB business.

The CMA’s interim report found that evidence shows that Allied Bakeries is a heavily loss-making business in a structurally declining market and the bakery business is not of wider strategic importance to Associated British Foods; while Allied Bakeries’ Kingsmill brand is considered to be weak compared to other brands, such as Hovis and Warburtons, and this has contributed to the significant decline in branded volumes.

“As one of only three GB suppliers with a nationwide delivery network that delivers bread and other bakery products direct to retail stores six days per week, Allied Bakeries faces high fixed costs from distribution, which has impacted profitability as Allied Bakeries’ volumes have declined,” states the CMA.

PROVISIONAL CONCLUSION

It added that the overall pool of potential purchases for the Allied Bakeries business as a whole is “likely to be limited as Allied Bakeries is loss making” with any potential purchaser requiring significant funding to absorb losses.

The CMA also notes that with the company’s Northern Ireland business largely independent of the GB business, it is profitable and considers that there are relevant differences between GB and NI that impact whether it is likely that there would be an alternative buyer for the NI business.

“The Allied Bakeries NI business represents an opportunity for other suppliers, such as those based in the Republic of Ireland, to enter or expand in NI to help overcome barriers to entry and expansion in NI, including access to distribution and the importance of the brand,” states the CMA.

“Evidence indicates that the markets for bread and other bakery products in NI are separate from those in GB,” it adds, stating that there are different consumer preferences in NI compared to GB, there are different distribution models and the competitive dynamics differ between GB and NI.

The CMA concludes provisionally that the merger between Hovis and Allied Bakeries would result in the creation of a relevant merger situation (RMS), and the creation of that RMS may be expected to result in a substantial lessening of competition (SLC) in the supply of each of bread, pancakes, potato farls and soda farls in Northern Ireland, but may not be expected to result in an SLC in the supply of bread or any other bakery products in GB.

This is not the final decision of the CMA, and it has invited any interested parties to make representations to them on these provisional findings no later than 5pm on Thursday 16^th April.

Responses can be submitted by email to ABFGrainProducts.Hovis@cma.gov.uk

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Interim Chief Economic Adviser, Jenny Haydock stated on 8^th January that the CMA had accepted the fast-track reference request made by ABF, Hovis Group Limited and Endless LLP, having concluded that the conditions to accept a fast-track reference request had been met.

As a result, the CMA made a reference to its chair for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013 in order that the group may investigate and report, within a period ending on 24^th June 2026, on the following questions: whether arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the UK for goods or services.

In a previous update made before Christmas, the CMA revealed that its deadline for announcing its decision whether to refer the merger for a phase 2 investigation was 19^th February 2026.

Responding to the CMA’s December announcement, a spokesperson for ABF said they would continue to work closely with the CMA to ensure the case is run as efficiently as possible and to “demonstrate why this transaction will help to create a more sustainable competitor that is better able to invest, innovate and deliver for customers”.

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In an update just before Christmas, the CMA revealed that its deadline for announcing its decision whether to refer the merger for a phase 2 investigation is 19^th February 2026.

“The Competition and Market Authority hereby gives notice pursuant to section 96(2A) of the Enterprise Act 2002 that the merger notice provided by Associated British Foods plc, Hovis Group Limited and Endless LLP in relation to the anticipated acquisition by ABF (via its wholly owned indirect subsidiary, ABF Grain Products Limited) of Hovis, meets the requirements of section 96(2) of the Act,” stated the announcement.

The initial period defined in section 34ZA(3) of the Act in relation to the Transaction commenced on 22^nd December 2025.

The first step of the CMA’s information-gathering process – an invitation to comment time period – concluded in early October, with the next stage including the launch of its formal investigation into the transaction.

It was announced last summer that Hovis Group would be bought over by ABF, with the proposed acquisition hailed as a “significant step towards creating a more sustainable and efficient bakery operation in the UK”.

In a statement, ABF said the acquisition would 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.

Responding to the CMA’s December announcement, a spokesperson for ABF said: “This formal step is an important milestone and follows ABF working constructively with the CMA to outline the challenges and changes taking place in the UK’s bakery sector.

“ABF will continue to work closely with the CMA to ensure this case is run as efficiently as possible and to demonstrate why this transaction will help to create a more sustainable competitor that is better able to invest, innovate and deliver for customers.”

The post CMA begins phase one investigation into proposed ABF acquisition of Hovis first appeared on Neighbourhood Retailer.

The first step of the CMA’s information-gathering process – an invitation to comment time period – concluded in early October, with one of the next stages being the launch its formal investigation into the transaction.

Having confirmed earlier this year they were in discussions regarding a potential transaction, it was announced during the summer that Hovis Group would be bought over by ABF.

As stated in their Interim Results Announcement back in April, Allied Bakeries faced what it called a “very challenging market”.

“We are evaluating strategic options for Allied Bakeries against this backdrop and we remain committed to increasing long-term shareholder value,” said a statement.

Subject to regulatory review by the CMA, the proposed acquisition has been hailed as a “significant step towards creating a more sustainable and efficient bakery operation in the UK”.

In a statement, ABF said the acquisition would 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.

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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.

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