Kingsmill owner cleared to create UK’s biggest bread brand with Hovis takeover

A £75m deal for the owner of Kingsmill to buy Hovis to create the UK’s biggest bread brand has been cleared by the competition watchdog. The Competition and Markets Authority (CMA) ruled that Associated British Foods’ proposed takeover of Hovis did not raise competition concerns because if the deal did not go ahead “the most likely outcome” would be ABF’s bakeries arm leaving the UK market entirely. This would affect especially people on lower incomes, for whom bread is a basic staple, the regulator said. ABF, whose UK bakery arm Allied Bakeries (AB) owns the Kingsmill, Allinson’s and Sunblest brands, supplies bread and other baked products such as muffins and hot cross buns across the country, and along with Hovis supplies own-brand baked goods to large supermarkets. Bread suppliers in the UK are struggling with declining demand and significant increases in costs, the CMA said. AB has run up losses over the last 14 years, despite efforts to improve performance through restructuring, because of the waning popularity of sliced bread, the increase in demand for lower-margin private-label products and higher costs such as energy, wheat and distribution. The competition regulator launched an in-depth investigation into the proposed deal after it was announced last August. ABF, which recently said it would spin off the Primark budget clothing chain next year , said the tie-up would combine the production and distribution activities of the two businesses. …