The Competition and Markets Authority has launched a phase one investigation
The UK’s competition authority has started an inquiry into Associated British Foods’ (ABF) acquisition of the iconic Hovis brand. ABF secured a deal in August to purchase the 135 year old bakery business from its American private equity owner, Endless.
The company announced plans to combine Hovis with its existing Allied Bakeries operation, which produces the Kingsmill and Allinson’s bread ranges.
This transaction would establish a significant force within the baking industry, positioned to rival Warburton’s and supermarket own-brand offerings.
Industry observers had anticipated that the Competition and Markets Authority (CMA) would scrutinise the arrangement. On Friday, the regulator formally commenced a phase one examination of the transaction.
This follows the CMA’s September request for stakeholders connected to the deal to provide feedback on how the move might affect sector competition.
The authority confirmed it will determine whether a more comprehensive phase two investigation is required by February 19.
An ABF spokesperson said: “This formal step is an important milestone and follows ABF working constructively with the CMA to outline the challenges and changes taking place in the UK’s bakery sector.
“ABF will continue to work closely with the CMA to ensure this case is run as efficiently as possible and to demonstrate why this transaction will help to create a more sustainable competitor that is better able to invest, innovate and deliver for customers.”
The Hovis agreement follows ABF’s initiation of a strategic review of Allied Bakeries, which has been recording losses in recent years due to cost pressures and shifting consumer preferences.
The company stated that the merger would unite “the production and distribution activities” of both businesses, resulting in “significant costs synergies and efficiencies”.
Hovis has sites across the UK, including in Avonmouth, Wellingborough, Nottingham, Golborne near Wigan, and Bradford.
Allied Bakeries also has bakeries and depots across the country, including in Cardiff, Stoke-on-Trent, West Bromwich, Lincoln, Stockport, Liverpool and Gateshead.
