UK private equity firm Endless is in discussions to acquire Allied Bakeries from Associated British Foods, in a deal that could unite two of the UK’s best-known bakery brands—Kingsmill and Hovis—under one owner.

The potential transaction forms part of AB Foods’ ongoing strategic review of Allied Bakeries, which includes the Kingsmill, Allinson’s, and Sunblest brands. The unit has underperformed since losing a key Tesco supply contract and has weighed on group results, prompting the company to explore divestment options.

Endless, which bought Hovis from The Gores Group and Premier Foods in 2020, has a strong track record of restructuring complex consumer businesses. The firm also owns BBF, a UK manufacturer of cakes and desserts, and is known for operational turnarounds across manufacturing-heavy sectors.

A merger of Kingsmill and Hovis would mark a significant consolidation move in the UK bread market and could attract regulatory scrutiny due to the enlarged group’s market share. However, synergies between the two brands—combining Kingsmill’s production scale and Hovis’s legacy market presence—could offer upside potential.

AB Foods, which also owns fashion retailer Primark and has faced broader margin pressure across its food portfolio, said no agreement has been reached and that it expects to provide an update in the second half of the year.

AB Foods shares rose 1% following the news, though the stock remains down 21% year-to-date.

Source: Reuters