Kingsmill-owner ABF confirms merger talks with Hovis
Kingsmill-owner ABF has confirmed it is in talks to merge with Hovis in what would become Britain’s biggest bread maker.
ABF said the talks had been prompted by a “very challenging” market for its products. Rising prices of wheat and lower demand for high-calorie goods like bread have made it tougher to make a profit in the industry over the past few years.
At the end of April, ABF reported an operating loss for Allied Bakeries, which makes Kingsmill products.
Its share price fell eight per cent on the back of a mixed set of overall first-half results.
A merger between the two companies would combine two of Britain’s longest-established food brands, although its size means it could come up against a probe by the Competition and Markets Authority.
Allied Bakeries was founded in 1935 by Wilard Garfield Weston, while Hovis was created in 1890 in Stoke-On-Trent.
The bakery was the forerunner to ABF. Allied Bakeries merged with Weston Foods in 1939, and the company name was changed to Associated British Food in 1960.
ABF said a merger was just one of the options it was looking at for Allied Bakeries, with a joint venture involving the distribution networks of Hovis and Kingsmill another possibility, according to Sky News.
In its latest set of half-year results, ABF reported a two per cent drop in revenue, from £9.7bn to £9.5bn.
Operating profit fell 24 per cent, from £931m to £710m, while profit before tax fell 10 per cent, from £911m to £818m.
ABF owns a diverse range of brands, from Primark to Twinings Ovaltine and British Sugar.