Associated British Foods Secures Hovis Acquisition

Associated British Foods has announced the acquisition of Hovis Group from private equity firm Endless LLP for an undisclosed sum, marking a significant consolidation in the UK bread manufacturing sector.

The deal, revealed this morning, sees the Kingsmill owner expand its bakery operations to better compete in the challenging UK bread market. AB Foods stated the combined business “will be better placed to compete effectively” against current market pressures.

The acquisition addresses long-standing profitability challenges at AB Foods’ UK bakery business Allied Bakeries, which has faced declining demand for pre-sliced bread and loss of distribution network scale in recent years. Chief Executive George Weston commented that “this transaction will create a UK bakeries business that is both profitable and sustainable over the long term”.

The move comes as the UK food sector grapples with inflationary pressures and changing consumer preferences. Hovis, a historic British bread brand established in 1886, brings significant heritage and market presence to AB Foods’ portfolio. The acquisition is expected to generate operational synergies through shared distribution networks and manufacturing efficiency gains.

Market analysts view the deal as strategically sound, given the complementary nature of the two businesses. The transaction will create one of the UK’s largest bread manufacturers, capable of competing more effectively with major retailers’ own-brand offerings.

The deal reflects broader consolidation trends in the UK food manufacturing sector, where companies are seeking scale advantages to navigate rising costs and margin pressures. AB Foods shares rose 0.4% following the announcement, suggesting investor approval of the strategic direction.

Industry experts expect the integration process to take 12-18 months, with potential job security implications for employees at both companies requiring careful management. The Competition and Markets Authority is expected to review the transaction given the combined entity’s market position.