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The UK Competition and Markets Authority has cleared Associated British Foods' (ABF) proposed deal to buy Hovis, following an in-depth Phase 2 investigation into the anticipated merger.
The CMA's independent inquiry group has published its final report on the transaction, find that the merger does not raise competition concerns.
ABF, which owns the Kingsmill brand, supplies bread and other bakery products across the UK. Its UK bakery business, Allied Bakeries, and Hovis are also significant suppliers of own-brand bakery products to major supermarkets.
The proposed acquisition was announced in August 2025, when ABF revealed its agreement to acquire Hovis in a deal expected to reshape the UK bread market. The deal was later fast-tracked to a Phase 2 investigation by the CMA, before the regulator provisionally cleared the merger in Northern Ireland earlier this year.
Since the start of the investigation, the CMA's inquiry group heard evidence that UK bread suppliers have faced longstanding challenges, including declining demand and significant increases in costs.
Evidence gathered during the investigation showed that both Allied Bakeries and Hovis have faced financial challenges. Allied Bakeries made significant losses over the past 14 years, despite exploring a range of options to improve performance.
The CMA said this was due to overall decline in demand for bread, increased demand for lower-margin private-label products and significant cost increases in areas including energy, wheat and distribution.
After considering the evidence and carrying out two public consultations, the inquiry group found that if the merger did not go ahead, the most likely outcome would be that Allied Bakeries would exit the market entirely in Great Britain and Northern Ireland.
As a result, the CMA said the competitive pressure from Allied Bakeries would be lost with or without the merger. On that basis, the inquiry group concluded that the transaction does not raise competition concerns.
Cyrus Mehta, Chair of the independent inquiry group leading the investigation, said: "Bread is a basic staple for millions of people, which is why it is important we looked carefully at this deal and assessed the competition implications for households across the UK".
"On the basis of the wide range of evidence we received, which showed the difficult position many UK-based bakeries are in, we found Allied Bakeries – owned by ABF – would likely leave the market entirely if the deal did not proceed. Taking that into account, we have concluded the deal does not raise competition concerns."
