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Associated British Foods PLC’s acquisition of Hovis Group Ltd was cleared by the UK’s competition watchdog on Tuesday, Back in May last year, AB Foods, a London-based food processing and clothing retailing conglomerate, confirmed talks with Hovis-owner Leeds-based Endless LLP, for a potential acquisition. At the time, AB Foods said it was evaluating strategic options for its Allied Bakeries division, as it continued to face a ‘very challenging market’. Allied Bakeries owns the bread brands Kingsmill, Allinson’s and Sunblest. It also produces own-label bakery ranges for major UK supermarkets. In August, AB Foods confirmed it will combine Hovis with Allied Bakeries to create a ‘profitable UK bread business that is sustainable over the long term’. No financial details of the deal were disclosed. The CMA approval follows a phase 2 probe into the deal. ‘Since the start of the investigation, the inquiry group has heard that bread suppliers in the UK have faced longstanding challenges, including declining demand and significant increases in costs,’ the CMA said. ‘Evidence gathered during the investigation showed that Allied Bakeries and Hovis have each faced financial challenges - with Allied Bakeries making significant losses over the last 14 years, despite exploring a range of options to improve performance, due to the overall decline in demand for bread, the increase in demand for lower-margin private-label products and significant increases in costs, such as energy, wheat and distribution.’ The regulator concluded: ‘Having carefully considered the evidence and engaged in 2 public consultations, the inquiry group has found that if the merger did not go ahead, the most likely outcome would be that Allied Bakeries would exit the market entirely in Great Britain and Northern Ireland. This means the competitive pressure from Allied Bakeries would be lost, with or without the merger, and therefore the inquiry group has found that the merger does not raise competition concerns.’ In a prior report on the deal, the CMA noted the Jacksons and Roberts bakeries both were acquired in pre-packaged administration processes in recent years, highlighting pressure the sector faces. What’s more, grocer Morrisons shut its loss making Rathbones bakery earlier this year. Northern Ireland had been a key focus of the FCA review. Last month, however, it published an interim report and provisionally concluded that the merger may not be expected to result in a substantial limiting of competition in Northern Ireland for suppliers of bread and certain other bakery products. AB Foods shares were down 1.4% to 1,899.00 pence each in London on Tuesday morning. Shares are down around 8% over the past 12 months and down 10% year-to-date, hurt by a profit warning in early January. In April, it announced plans to demerge its fast-fashion retail business Primark. The decision followed a strategic review, announced by AB Foods in November. It is intended that both Primark and ’FoodCo’ will be listed on the London Stock Exchange and, given their scale, both are expected to be constituents of the FTSE 100 index. Following the demerger, FoodCo will retain the Associated British Foods PLC name. Copyright 2026 Alliance News Ltd. All Rights Reserved.
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