In a potentially landmark development for Britain’s shrinking bread market, Associated British Foods (ABF) - parent company of Allied Bakeries - has confirmed it is in talks with private equity firm Endless LLP over a possible merger.
The deal could bring together Kingsmill and Hovis - two of the UK’s most iconic bread brands - in a move that underscores the challenges facing the sector.
The talks, first reported by Sky News, come as ABF weighs strategic options for its loss-making bakery division. Allied Bakeries - which makes Kingsmill, Allinson’s and Sunblest - has reportedly been bleeding around £30 million annually and was dealt a significant blow after losing a major supply contract with Tesco.
ABF’s interim results released at the end of April revealed a 10% drop in group operating profit (down to £684 million), with losses at Allied Bakeries contributing to the decline. Although ABF’s shares rose 1% following confirmation of the talks, the company’s stock remains down over 20% on the year, reflecting broader sectoral strain.
Endless LLP, which acquired Hovis in 2020, has also been navigating a difficult market, with the 135-year-old brand contending with volatile wheat prices, rising energy costs, and shifting consumer preferences toward low-carb, gluten-free and artisan bread alternatives.
Key facts
UK bread market value:
£5 billion/year
Loaves sold daily in the UK:
Around 11 million
Companies involved:
ABF (owner of Allied Bakeries – Kingsmill, Allinson’s, Sunblest)
Endless LLP (owner of Hovis since 2020)
UK market shares (pre-merger):
Warburtons: 34%
Hovis: 24%
Allied Bakeries: 17%
Others: 25%
Potential combined share:
41%
Sliced bread’s shrinking market
Bread consumption in the UK has halved over the past 50 years as consumers seek healthier or more artisanal alternatives. Traditional wrapped loaves have particularly suffered.
According to industry sources, the move to merge Kingsmill and Hovis is a clear bid to stay relevant in a market being reshaped by both economics and taste.
Associated British Foods addressed these mounting pressures during its earnings call to report interim results for the 24 weeks ended 1 March 2025. Group CEO George Weston and interim finance director Joana Edwards highlighted the difficulties facing Allied Bakeries, citing persistent losses and a highly competitive market.
“Allied Bakeries continues to face a very challenging market,” ABF stated. “We are evaluating strategic options ... and expect to provide an update in the second half of 2025.”
For Endless, a tie-up with Kingsmill could unlock significant back-end efficiencies. Analysts believe the combined business could shave off £50 million in annual costs through rationalised distribution and logistics networks.
However, competition concerns loom large. A merged Hovis-Kingsmill operation could command over 40% of the branded sliced bread segment: enough to surpass Warburtons in volume, though not necessarily in revenue, given Warburtons’ broader product range. The Competition and Markets Authority (CMA), the UK’s primary competition watchdog, is therefore expected to scrutinise any such deal closely.
The CMA itself has recently come under political pressure following the government’s controversial decision in January to remove its chairman, Marcus Bokkerink, before the end of his term. Ministers cited the need to reorient the regulator’s priorities toward “pro-growth” and “pro-business” outcomes. The move sparked widespread debate over the independence of UK regulators and their ability to challenge mergers or market behaviour that could harm consumers or competition.
With scrutiny already heightened, how the CMA approaches a potential Hovis-Kingsmill merger will be viewed as a bellwether for the regulator’s direction in a post-Bokkerink era.
Timeline: Kingsmill + Hovis merger talks
1890: Hovis founded by Richard ‘Stoney’ Smith, a miller from Macclesfield, who had developed a new wheatgerm-rich flour intended to offer greater nutritional value than refined white flour. To market his creation, he launched a national competition to name the product. The winning entry, Hovis, was coined by London student Herbert Grime, derived from the Latin ‘Hominis Vis’ meaning ‘the strength of man’. Grime won a £25 prize (valued at over £3,000 today).
1935: Allied Bakeries founded by Canadian businessman Willard Weston, father of the billionaire Weston family that still controls ABF, as part of his expansion into UK food manufacturing. It quickly became one of Britain’s major bakery operations.
2020: Endless purchased Hovis from a joint venture between Premier Foods and The Gores Group. While the full acquisition price remains undisclosed, financial documents confirm Endless paid £37 million for Premier’s 49% stake. The price paid to The Gores Group for its 51% majority holding was not made public. At the time, Hovis operated eight bakeries and employed around 2,700 people across the UK.
April 2025: In its interim results announcement for the 24 weeks ending 1 March 2025, ABF revealed a 10% drop in group operating profit to £684 million. The company cited unsustainable losses at Allied Bakeries - believed to be in the range of £30 million per year - as a major factor. The division’s struggles were compounded by the loss of a major supply contract with Tesco.
4 May 2025: Sky News breaks the story that ABF and Endless LLP are in advanced discussions about merging Allied Bakeries and Hovis. The potential deal is described as a ‘landmark’ move in the UK bakery industry, likely to trigger scrutiny from the Competition and Markets Authority (CMA).
6 May 2025: ABF formally confirms it is in talks with Endless regarding a potential transaction. It stresses that “there is no certainty that a transaction will be concluded nor as to the terms of such a transaction.” The company reiterates its focus on long-term shareholder value and its ongoing review of Allied Bakeries.
Mid/late 2025: If a formal agreement is reached, the UK’s Competition and Markets Authority is expected to launch an investigation into the merger’s impact on competition. With a combined market share of over 40% of the UK’s wrapped bread sector, the deal could reduce the number of major suppliers from three to two - Warburtons, Kingsmill-Hovis and others - raising serious regulatory questions.
Both ABF and Endless have declined to comment further on the nature or structure of the talks.
