The Competition and Markets Authority (CMA) has on Tuesday cleared Associated British Foods’ (ABF) proposed acquisition of Hovis, concluding that the deal does not raise competition concerns after finding Allied Bakeries would likely have exited the market if the transaction did not proceed.
In its final report following an in-depth phase two investigation, the regulator’s independent inquiry group said evidence gathered during the inquiry showed that Allied Bakeries, owner of the Kingsmill brand, has faced significant and sustained financial challenges amid declining bread consumption, growing demand for lower-margin own-label products and rising operating costs.
The CMA said Allied Bakeries has made substantial losses over the past 14 years despite exploring a range of measures to improve performance. The inquiry group concluded that the most likely outcome without the merger would have been Allied Bakeries’ complete exit from the bread market in Britain and Northern Ireland.
As a result, the regulator determined that the competitive constraint provided by Allied Bakeries would be lost regardless of whether the merger went ahead, meaning the transaction would not result in a substantial lessening of competition.
ABF announced plans to acquire Hovis from Endless LLP in August 2025, arguing that the combination would help create a more sustainable UK bread business at a time when the sector is facing significant structural pressures.
The CMA had initially expressed concerns over the impact of the merger in Northern Ireland, where Allied Bakeries and Hovis are among the region’s largest bakery suppliers. However, in a supplementary interim report published in May, the regulator revised its provisional findings after receiving additional financial information, company documents and evidence from third parties.
That review led the CMA to conclude that Allied Bakeries’ Northern Ireland operation would also likely have exited the market in the absence of the deal, removing concerns that the merger would reduce competition in the region.
Cyrus Mehta, chair of the independent inquiry group leading the investigation, said: “Bread is a basic staple for millions of people, which is why it is important we looked carefully at this deal and assessed the competition implications for households across the UK.
“On the basis of the wide range of evidence we received, which showed the difficult position many UK-based bakeries are in, we found Allied Bakeries – owned by ABF – would likely leave the market entirely if the deal did not proceed. Taking that into account, we have concluded the deal does not raise competition concerns.”
The decision brings to an end a lengthy regulatory review and clears the way for ABF to complete its acquisition of Hovis.