Breadmakers Hovis and Kingsmill Merger Agree

Agreement to combine the two British biggest bread producers – Hovis and Kingsmill – had been agreed upon after months of conversation.

Associated British Foods (ABF), owner of the Kingsmill Allied Bakeries parent company, has agreed to an agreement with an endless investment company, which has the Hovis to acquire the brand.

The financial provisions of the agreement have not been revealed but are expected in the coming months.

Merger conversation between Hovis and Kingsmill was first revealed in May.

Kingsmill Profit ‘is increasingly challenged’

In a statement issued to the London Stock Exchange, Kingsmill’s owner said: “As stated in the temporary results, the Associated British Foods PLC (ABF) has evaluated various strategic options for Allied Bakeries, the British Bakery Shop Business.

“Profitability in Allied Bakeries has been increasingly challenged in recent years by a decrease in demand for bread that has been sliced and packaged, and loss of scale in the National Distribution Network Allied Bakeries that serves large retailers by sending daily bread and bread.

“Following this review, ABF announced today that they had reached an agreement to acquire Hovis Group Limited from LLP without end.

“Hovis Group is an integrated bakery business, involved in the production and distribution of bread and bread products in the UK.

“This acquisition will combine production and distribution activities of two businesses, encouraging significant synergy and cost efficiency, to create a sustainable British bread business in the long run.

“The joint business will be placed better to compete effectively and to build a stable platform for product innovation in the British bread category segment that grows as a result of changes in tastes and consumer needs.

“This will include an increase in existing products and expansion to the range of new products.”

Loss of widening in the Hovis before the takeover

Last month, AM City Report that losses have widened in Hovis during the latest financial year.

Losses before the company’s tax increased from £ 3.6 million to £ 4.7 million this year to 28 September 2024.

The account submitted to the Companies House also showed its income of £ 446.8 million for 12 months, down from £ 489 million reported for the previous year.

Allied Bakeries was founded in 1935 by Willar Garfield Weston, while Hovis was created in 1890 in Stoke-On-Trent.

Bakery is a forerunner to ABF. Allied Bakeries joined Weston Foods in 1939, and the name of the company was changed to related English food in 1960.

ABF has a variety of brands, from primark to twinings ovaltine and English sugar.

George Weston, Chief Executive of ABF, said: “This transaction will create a profitable and sustainable British bakery business in the long run.

“Supporting the Hovis and Kingsmill brands with operations that are invested well and efficiently will also allow innovation and growth.

“This solution will create value for shareholders, provide greater choices for consumers and increase efficiency for customers.”