UK Bread Giants Unite
CMA Approves £75M ABF-Hovis Merger, Creating UK's Largest Bread Manufacturer
Anonymous
Key Points
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The CMA accelerated the timetable: it fast-tracked the merger investigation to phase two at both firms’ request, with the original phase one deadline set for 19 February and a final decision due by 24 June (the fast-track could bring the process forward by up to six weeks).
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In its March provisional assessment, the CMA characterized ABF’s Allied Bakeries as a “heavily loss-making business in a structurally declining market” and said it was “not of wider strategic importance to ABF”; it also described the Kingsmill brand as “weak” compared with Hovis and Warburtons.
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The Grocer reported financial details beyond the summary’s loss drivers: Hovis’ private-equity owner Endless bought it in 2020 for a reported £75m, and Hovis’ latest accounts (to 28 September 2024) showed pre-tax losses rising to £4.7m.
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Broker Shore Capital tied its support to a specific operational outcome, saying the CMA’s decision “facilitates the pathway for a new business combination” expected to create a “structurally more efficient firm” with a “slimmed down central overhead, manufacturing platform, and, perhaps critically, distribution network.”
The UK's Competition and Markets Authority has given final approval to Associated British Foods' £75 million takeover of bread maker Hovis, clearing the deal without conditions on June 16, 2026 Food Manufacture. The combined company will control roughly 35% of the UK bread market, making ABF the country's largest bread manufacturer — ahead of current leader Warburtons Finance Yahoo.
The CMA ruled that blocking the deal would almost certainly cause ABF's Allied Bakeries division — the maker of Kingsmill — to shut down entirely. Panel chair Cyrus Mehta said a full market exit was the "most likely outcome" if the merger failed, meaning the watchdog saw no competition concern worth acting on Finance Yahoo.
Allied Bakeries Was Already Heading for Collapse
The CMA's decision rests on a stark financial reality. Allied Bakeries has lost money for 14 consecutive years Food Manufacture. In the 52 weeks to August 2025, it recorded pre-tax losses of £53.8 million — up from £21.7 million the year before. The regulator called it a "heavily loss-making business in a structurally declining market" and said it was "not of wider strategic importance" to ABF.
Hovis was in trouble too. Its revenue fell 8.6% to £446.8 million in 2024, and it posted an operating loss of £6.9 million MarketScreener. Private equity firm Endless bought Hovis in 2020 for around £75 million — the same price ABF is now paying to take it over. Both companies have been squeezed by rising energy and wheat costs, and by supermarkets pushing cheaper own-brand loaves over branded products.
Kingsmill Lost Nearly a Third of Its Sales in One Year
The Kingsmill brand has taken a severe beating. Its volumes dropped 31.5% in the year to September 2025, stripping it of its position as the UK's third-biggest bread brand Food Manufacture. The CMA described Kingsmill as "weak" compared with Hovis and market leader Warburtons. ABF disagreed publicly, insisting the brand still offers "nutritious, good value" products for millions of shoppers.
Bread demand has been falling for years as younger consumers move toward sourdough and seeded varieties. Supermarkets have also shifted shelf space toward lower-margin own-brand loaves, shrinking the room for branded rivals to grow or even hold ground. The CMA concluded that a market with three national bread brands was no longer viable.
Fast-Track Review Wrapped Up Eight Days Early
ABF and Hovis jointly asked the CMA to skip straight to a full Phase 2 investigation in January 2026 — an unusual move designed to get a faster answer. The original Phase 1 deadline was February 19, 2026, and the final decision was due by June 24. The CMA beat that deadline by eight days, publishing its final report on June 16 Food Manufacture.
The CMA also reversed an earlier worry during the review. In May 2026, a supplementary report dropped initial concerns about competition in Northern Ireland's market for morning goods like potato farls and soda farls. ABF will keep its Northern Ireland flour mill and distribution centres without having to sell anything off. ABF welcomed the "unconditional clearance" and said it would move quickly toward completing the deal MarketScreener.
Synergies Promised, But Job Cuts Loom Over 16 Bakeries
ABF says combining the two businesses will unlock "synergies and efficiencies" that help it compete and invest in new products. Broker Shore Capital said the deal "facilitates the pathway for a new business combination" that will be "structurally more efficient" — specifically through a slimmer central overhead, manufacturing platform, and, "perhaps critically, distribution network" MarketScreener.
The merged company will run 16 bakeries across the UK. ABF CEO George Weston said the goal is to build a "sustainably profitable UK bakeries business." However, trade unions and regional groups have raised concerns that "synergies" is code for closing redundant sites and cutting jobs. ABF has pointed to product innovation — particularly in pancakes, muffins, and healthier alternatives — as the growth path for the combined brand portfolio.
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