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The owner of Kingsmill has announced the acquisition of rival Hovis, with plans to merge the two companies and create the largest bread brand in the UK. Associated British Foods (ABF), known for owning Primark, Ryvita, and Twinings, aims to streamline operations and cut costs to turn the currently loss-making businesses into profitable ventures. The Unite union, representing workers at both Hovis and Kingsmill, has expressed concerns about potential threats to jobs, pay, and conditions resulting from the merger.
Warburtons currently holds the top position in the UK breadmaking market, making it necessary for the proposed deal between Kingsmill and Hovis to receive approval from the competition watchdog. Sales of traditional pre-packaged bread from Kingsmill and Hovis have faced a decline in recent years, attributed to a shift in consumer preferences towards specialty breads like sourdough and ciabatta. Additionally, some British consumers are opting for high-protein diets, cutting back on products like sandwiches and toast.
ABF disclosed that it had reached an agreement to purchase Hovis from private equity owner Endless for an estimated £75m. The combined entity aims to enhance its competitiveness and innovation to meet evolving consumer needs and preferences. Allied Bakeries, an ABF subsidiary producing Kingsmill and Allinson’s bread, had initiated talks about a potential deal’s possibility three months prior. Hovis, established in 1890, was acquired by Endless in 2020 from Premier Foods, the owner of the Mr Kipling brand.
ABF’s CEO, George Weston, emphasized the value creation for shareholders, expanded consumer choice, and improved customer efficiencies resulting from the merger. Unite’s general secretary, Sharon Graham, stressed the importance of safeguarding jobs in the process and ensuring the active involvement of the union in decisions impacting its members. The completion of the deal is subject to approval by the Competition and Markets Authority, indicating the need for regulatory clearance before finalizing the merger
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