Hovis and Kingsmill-owners in talks about historic bread merger

The potential merger between Hovis and Allied Bakeries, the primary brands owned by Endless and Associated British Foods (ABF) respectively, signals a seismic shift in the UK's bakery landscape. Amid a backdrop of declining supermarket loaf sales, these two iconic British brands are in prolonged discussions aimed at combining their operations in a historic merger. The impetus for such talks arises from shifting consumer habits, competition from artisanal bread producers, and economic pressures, including the impact of the Ukraine conflict on wheat prices. Analysts suggest that the merger could be structured as an acquisition of Hovis by ABF, although banking advisers are considering alternative configurations, including a joint venture. If consummated, this merger would create a formidable player in the bread industry, potentially challenging Warburtons' current market dominance. However, regulatory approval will pose a significant hurdle, with the Competition and Markets Authority expected to scrutinize any deal given its potential market-altering impact. The industry is watching closely for strategic developments, especially since ABF has signaled it is evaluating multiple options for Allied Bakeries' future.