ABF cleared to form biggest UK bread brand with Hovis takeover

Wednesday, June 17, 2026

The UK Competition and Markets Authority has approved Associated British Foods’ £75 million acquisition of Hovis, forming the country's largest bread brand after concluding the deal poses no major competition risks. This acquisition aims to stabilize a financially struggling bakery sector amid rising costs and shifting consumer habits, though it may lead to job cuts as ABF consolidates its operations.

The UK competition regulator has approved Associated British Foods’ (ABF) £75 million acquisition of Hovis, a move set to create the largest bread brand in the country. The Competition and Markets Authority (CMA) concluded that the deal raises no significant competition concerns, primarily because ABF’s bakery division, Allied Bakeries (AB), would likely exit the UK market if the takeover did not proceed.

ABF’s Allied Bakeries owns several prominent bread brands including Kingsmill, Allinson’s, and Sunblest, supplying a range of baked goods such as muffins, hot cross buns, and pancakes. Together with Hovis, which also owns Mother’s Pride and Ormo, the combined entity will supply both branded and private-label bread products to major supermarket chains across the UK.

The CMA cited a challenging economic context for bread suppliers, marked by declining demand and rising costs in energy, wheat, and distribution. Allied Bakeries has reportedly incurred losses over the past 14 years despite undergoing multiple restructuring efforts. Shifts in consumer preferences, particularly among younger demographics, have also affected the sector, with reduced consumption of sliced bread in favor of artisan varieties like sourdough, alongside growing interest in low-carb diets and concerns over ultra-processed foods.

The regulator undertook a detailed investigation into the takeover after the proposal was announced in August last year. Cyrus Mehta, chair of the independent inquiry panel, emphasized bread’s status as a fundamental staple for many households. He explained that Allied Bakeries would probably withdraw from the market entirely if the acquisition was blocked, heightening risks for consumers, especially those on lower incomes.

Hovis has faced financial difficulties under the ownership of the UK private equity firm Endless, which acquired the bakery in 2020. The company’s pre-tax losses increased to £4.7 million for the year ending September 28, 2024, up from £3.6 million the previous year.

ABF welcomed the CMA’s decision, stating that the merger would integrate the production and distribution activities of the two businesses, fostering a sustainably profitable bakery operation in the UK over the long term. The company noted the difficult economic environment but expressed confidence in the ongoing demand for nutritious and affordable staple foods.

The deal also comes as ABF plans to spin off its Primark discount clothing chain next year as part of a broader strategic shift. The expected consolidation of bakery operations, however, is likely to result in job losses within the sector.