Associated British Foods (ABF) has completed its acquisition of Hovis Group, paving the way for the integration of the Hovis and Allied Bakeries businesses following regulatory approval last month.
The deal, completed on Wednesday (8 July), combines ABF's Allied Bakeries business with Hovis to form a new business that will operate as Hovis Bakeries under the brand line 'Nourishing the Nation'.
ABF said the enlarged business aims to create a "sustainably profitable" UK bakery operation with a stronger market position, supported by operational efficiencies, investment in brands and new product development.
The completion follows clearance from the UK's Competition and Markets Authority in June after an in-depth phase two investigation. The regulator concluded the merger did not raise competition concerns because Allied Bakeries would likely have exited the market if the transaction had not proceeded.
The CMA found Allied Bakeries, owner of the Kingsmill brand, had suffered sustained financial losses over the past 14 years amid declining bread consumption, growing demand for lower-margin own-label products and rising operating costs. It determined that Allied's competitive presence would have been lost regardless of the merger, meaning the acquisition would not substantially lessen competition.
ABF, which announced plans to acquire Hovis from Endless LLP in August 2025, said integration work will begin immediately and is expected to deliver significant production and distribution synergies.
The company acknowledged that restructuring required to achieve those efficiencies will involve upfront costs, with the acquisition expected to be marginally dilutive to earnings in its 2027 financial year before becoming earnings accretive thereafter.
The combined business also plans to invest in faster-growing areas of the bakery market, including healthier product ranges, reflecting changing consumer preferences.
George Weston, chief executive of ABF, said: "The completion of this transaction is a significant step towards the delivery of a profitable UK bread business.
"By combining our expertise, scale and capabilities with targeted investment into new product categories, this business can return to growth, provide greater consumer choice, serve our customers better than ever and so create value for shareholders.
"The transaction will support the wider UK economy, including by securing high-quality jobs."
Sarah Arrowsmith, chief executive of Hovis Bakeries, said the merger represented "an exciting opportunity to create a large and transformative UK bakery business".
"We will now begin the work of revitalising our brands through innovation, becoming the UK's best own-label bakery partner and strengthening our position as the bakery industry's route to market through our unique direct-to-store network," she added.
The transaction marks the conclusion of a lengthy regulatory process after the CMA initially raised concerns over competition in Northern Ireland before revising its provisional findings in May following further financial evidence showing Allied Bakeries' Northern Ireland business would also likely have exited the market without the deal.