Primark-owner ABF gets Hovis deal oven-ready

Yahoo

a day ago

The London-listed parent of Primark was on Wednesday applying the finishing touches to a landmark transaction that will unite the Hovis and Kingsmill bread brands under common ownership.
Sky News understands that a deal for Associated British Foods (ABF) to acquire Hovis from private equity firm Endless is likely to be announced by the end of the week.
The timetable remains subject to delay, banking sources cautioned on Wednesday.
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The deal, which will see ABF paying about £75m to buy 135 year-old Hovis, is likely to trigger a lengthy review by competition regulators, given that it will bring together the second and third-largest suppliers of packaged bread to Britain's major supermarkets.
ABF owns Kingsmill's immediate parent, Allied Bakeries, which has struggled in recent years amid persistent price inflation, changing consumer preferences and competition from larger rival Warburtons as well as new entrants to the market.
Confirmation of the tie-up will come three months after Sky News revealed that ABF and Endless - Hovis's owner since 2020 - were in discussions.
Industry sources have estimated that a combined group could benefit from up to £50m of annual cost savings from a merger.
Allied Bakeries was founded in 1935 by Willard Garfield Weston, part of the family which continues to control ABF, while Hovis traces its history even further, having been created in 1890 when Herbert Grime scooped a £25 prize for coming up with the name Hovis, which was derived from the Latin 'Hominis Vis' - meaning 'strength of man".
The overall UK bakery market is estimated to be worth about £5bn in annual sales, with the equivalent of 11m loaves being sold each day.
Critical to the prospects of a merger of Allied Bakeries, which also owns the Sunblest and Allinson's bread brands, and Hovis taking place will be the view of the Competition and Markets Authority (CMA) at a time when economic regulators are under intense pressure from the government to support growth.
Warburtons, the family-owned business which is the largest bakery group in Britain, is estimated to have a 34% share of the branded wrapped sliced bread sector, with Hovis on 24% and Allied on 17%.
A merger of Hovis and Kingsmill would give the combined group the largest share of that segment of the market, although one source said Warburtons' overall turnover would remain higher because of the breadth of its product range.
Responding to Sky News' report in May of the talks, ABF said: "Allied Bakeries continues to face a very challenging market.
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"We are evaluating strategic options for Allied Bakeries against this backdrop and we remain committed to increasing long-term shareholder value."
Prior to its ownership by Endless, Hovis was owned by Mr Kipling-maker Premier Foods and the Gores family.
At the time of the most recent takeover, High Wycombe-based Hovis employed about 2,700 people and operated eight bakery sites, as well as its own flour mill.
Hovis's current chief executive, Jon Jenkins, is a former boss of Allied Milling and Baking.
ABF declined to comment, while neither Endless nor Hovis could be reached for comment.