Discussions Within Hovis and Kingsmill Owners Regarding Potential Bread Merger - Historic Proposal Under Consideration
Hovis and Kingsmill in Potential Mega-Merger Amid Struggling UK Bread Market
Exclusive news: London-based Associated British Foods (ABF) and investment firm Endless, the owners of Hovis and Kingsmill respectively, are in talks about a historic merger—as the UK's bread industry grapples with a decades-long slump.
City sources have confirmed ongoing discussions between ABF, the parent company of Kingsmill, and Endless, the owner of Hovis, about a potential amalgamation of the two businesses. At present, there's no assurance that a deal will materialize. Financial advisers are actively working on the negotiations regarding a possible transaction.
If finalized, the acquisition could be structured as Hovis being absorbed by ABF, according to analysts, although specifics about the merger's mechanics or the valuations of the two entities remain unclear at this time. It's worth noting that ABF is also exploring options unrelated to Hovis for the future of Kingsmill's immediate parent, Allied Bakeries.
A combined Hovis and Kingsmill would bring together two highly recognizable ambient food brands, with Allied Bakeries founded in 1935 by Willard Garfield Weston, a member of the Weston Family that controls ABF. Hovis, on the other hand, dates back to 1890, when Herbert Grime won a £25 prize for naming the company Hovis, derived from the Latin term 'Hominis Vis' – man's strength.
The bread industry has been hit hard by persistent inflation, increased competition from artisanal bakeries, and shifting consumer preferences toward low-carb diets. Adding to these challenges, the war in Ukraine has led to rising wheat and flour prices. According to the most recent Hovis financial statements, these factors have worsened inflationary pressures on bread producers1.
The UK bakery market is estimated to generate approximately £5 billion in annual sales, with the average sale of around 11 million loaves everyday2. However, the merger could face obstacles in terms of its implications for competition within the UK market. Warburtons, the leading British bakery group, holds an estimated 34% share of the branded wrapped sliced bread market, followed by Hovis at 24% and Allied Bakeries at 17%, according to industry insiders2.
Reducing the number of major supermarket bread suppliers from three to two could test the UK's Competition and Markets Authority (CMA) as they evaluate industry-reshaping mergers amid increasing pressure from the government2. A potential joint venture between Hovis and Kingsmill's distribution networks could serve as a less likely alternative to a full-blown merger, with analysts estimating potential savings of up to £50 million from such a collaboration2.
Stay tuned for further updates in this developing story as negotiations progress and regulatory implications become clearer3.
More Money
- Nationwide Scouts for Successor to Chairman
- WH Smith Buyer Braces for 12-month Shop Closures Ban
- Trump plans Tariff on Non-US Movies: Union Warns of UK Film Industry's Collapse
The potential merger between Hovis and Kingsmill, if successful, could reshape the UK's bread industry, involving notable players in war—that is, competitive battles—within the business and finance sectors. Amid rising wheat prices due to the war in Ukraine, such a merger could potentially lead to cost-cutting negotiations within the industry, with estimates suggesting savings of up to £50 million from a joint venture between the two distributions networks.
