Associated British Foods has confirmed it is in talks with the parent company of Hovis about selling its Allied Bakeries business, which includes Kingsmill.
The company said Allied Bakeries “continues to face a very challenging market” and it is in “discussions with Endless LLP (Hovis’s private equity owner) regarding a potential transaction”.
“We are evaluating strategic options for Allied Bakeries against this backdrop and we remain committed to increasing long-term shareholder value,” it said on Tuesday.
It comes after reports over the weekend that Endless and AB Foods, which also owns Primark, were negotiating a deal that could attract scrutiny from the competition watchdog.
The takeover would bring Kingsmill and Hovis, two of the UK’s best-known and oldest supermarket bread brands, under one roof.
High inflation in recent years combined with changing consumer habits have led to bread companies struggling with sales in recent years.
Allied Bakeries was founded in 1935, and also owns the Allinson’s and Sunblest brands, with bakeries and depots stretching from Glasgow to London.
Hovis, which was founded in 1890, was bought by Endless in 2020 from Premier Foods, which owns the Mr Kipling brand.
The deal would likely attract the attention of the Competition and Markets Authority (CMA), as it would combine two of the biggest bread makers in the country behind the market leader, Warburtons.
However, the CMA is under its own scrutiny from the Government, which earlier this year removed chairman Marcus Bokkerink as part of a bid to make it more focused on promoting economic growth.
