Associated British Foods (ABF), the parent company of Kingsmill, has announced an agreement to purchase Hovis, a rival brand, with plans to merge the two companies. This merger aims to establish the largest bread brand in the UK. ABF, which also owns Primark, Ryvita, and Twinings, indicated that it will implement cost-cutting measures to transition both companies, currently operating at a loss, into profitable entities.
The Unite union, which represents workers from both Hovis and Kingsmill, has expressed concerns regarding potential impacts on jobs, pay, and working conditions, stating that it will not accept any negative changes in these areas. Warburtons currently leads the UK bread market, and the planned merger requires approval from the Competition and Markets Authority (CMA) to proceed.
Declines in sales for Kingsmill and Hovis are attributed to reduced demand for standard pre-packaged bread, as consumers increasingly favor specialty options such as sourdough and ciabatta. Additionally, some British consumers are moving away from high-carbohydrate foods, affecting sandwich and toast consumption.
ABF confirmed the acquisition of Hovis from its private equity owner, Endless, with the deal reportedly valued at around £75 million. The company believes that the merger will enhance its competitive position and allow for the development of new products in response to evolving consumer preferences.
Founded in 1890, Hovis was purchased by Endless in 2020 from Premier Foods, which owns the Mr Kipling brand. ABF has stated that the merger is expected to yield significant cost synergies and efficiencies, contributing to a more sustainable and profitable operation. While ABF’s chief executive, George Weston, remarked on the potential benefits for shareholders and consumers, Unite general secretary Sharon Graham emphasized the importance of protecting jobs throughout the merger process.
Source: https://www.bbc.com/news/articles/c4gm3g2ljz1o?at_medium=RSS&at_campaign=rss