Associated British Foods (AB Foods), the owner of Kingsmill, has agreed to acquire rival bread maker Hovis from private equity firm Endless LLP, in a deal that will combine two of the UK’s most recognised bakery brands, according to a Bloomberg report.

The merger will unite Hovis with AB Foods’ Allied Bakeries, enabling shared production and distribution networks and opening opportunities for new product development. Financial terms were not disclosed, and the transaction remains subject to regulatory approval.

“This transaction will create a UK bakeries business that is both profitable and sustainable over the long term,” said AB Foods Chief Executive George Weston, as the company highlighted pressures on the bread market from changing consumer diets and rising input costs.

Both businesses have faced recent challenges: Allied Bakeries has been operating at a loss, while Hovis posted a £6.9m operating loss in the year to September 2024. Endless acquired Hovis in 2020 for £37m for Premier Foods’ 49% stake, plus an undisclosed amount for the remainder.

Analysts say the deal could help the combined group improve efficiency and margins, positioning it more competitively against market leader Warburtons.

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