Jobs could be put at risk in the UK’s bread-making sector as Kingsmill looks to create the UK’s biggest bread brand by buying rival Hovis.
Kingsmill employs more than 4,500 people across 20 sites in the UK, while Hovis has about 3,000 workers.
Sales at Hovis, owned by private equity company Endless, have been particularly badly hit as the popularity of sliced loaves has declined, falling by 9% to £447 million in the year to September 2024.
ABF’s bakery division, Allied Bakeries – which includes Kingsmill, Allinson’s and Sunblest – has seen annual losses of about £30 million despite sales of about £400 million, analysts say.
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The number of jobs that could be lost in a merger between the firms is not yet known.
The largest bakery employer in the UK (about 5,000 employees) is Warburtons, which remains a family-owned business.
ABF, which also owns the Primark clothing chain, said Hovis and Kingsmill’s production and distribution would be combined, saving about £55 million. This seems likely to lead to significant job losses. It said the merger would drive “significant cost synergies and efficiencies to create a more competitive and sustainable business.”
The proposed merger between the UK’s second and third-largest bread brands faces scrutiny from the competition watchdog – a process that could take up to one year.
The Competition and Markets Authority will look at whether the brands face sufficient rivalry on price and quality from supermarket own labels and other options like Warburtons, which accounts for more than a quarter of packaged sliced bread sales.
ABF chief executive George Weston said the transaction “would create a UK bakeries business that is both profitable and sustainable over the long term.
“Supporting the Hovis and Kingsmill brands with well-invested and efficient operations will also enable innovation and growth. This solution will create value for shareholders, provide greater choice for consumers and increase efficiencies for customers.”
The merger had been mooted since May this year.
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