Associated British Foods to Acquire Hovis in Major Bakery Deal

Associated British Foods (ABF) has confirmed an agreement to acquire the Hovis Group from private equity firm Endless. This significant transaction aims to merge Hovis with ABF’s existing bakery division, which produces popular brands such as Kingsmill and Allinson’s bread. The announcement was made on October 20, 2023, and is expected to enhance operational efficiencies within the UK bakery sector.

The acquisition comes after a strategic review of ABF’s Allied Bakeries division, which has faced challenges, including losses attributed to rising costs and changing consumer preferences. By integrating Hovis, ABF anticipates achieving “significant cost synergies and efficiencies,” positioning the combined entity for sustainable growth in an evolving market.

Hovis, a brand with a rich history dating back to its establishment in 1890, was acquired by Endless in 2020 from Premier Foods, known for its Mr Kipling products. This recent move reflects ABF’s commitment to strengthening its presence in the competitive UK bakery market, which is currently dominated by established players such as Warburtons.

Strategic Benefits and Future Outlook

ABF Chief Executive George Weston expressed optimism about the acquisition, stating that it will create a bakery business that is both profitable and sustainable over the long term. He emphasized the importance of supporting the Hovis and Kingsmill brands with “well-invested and efficient operations” to foster innovation and growth.

The combined business is expected to better compete in segments of the bakery category that are expanding due to changing consumer tastes and needs. ABF highlighted that the move would not only create shareholder value but also enhance options for consumers while increasing efficiencies for customers.

As part of this acquisition, ABF plans to expand new product ranges and improve existing offerings. The deal is subject to regulatory approval, with potential scrutiny from the Competition and Markets Authority (CMA), which oversees mergers and acquisitions in the UK.

This acquisition marks a significant shift in the UK bakery landscape, with ABF poised to strengthen its market position through strategic growth and innovation. The decision comes at a crucial time when the industry is adapting to shifting consumer demands and economic pressures.

As the transaction progresses, industry stakeholders will closely monitor its implications for competition and consumer choice in the UK bread market.