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Kingsmill’s owner has said it has agreed to buy rival Hovis and plans to merge the companies in a move that would create the UK’s biggest bread brand.<\/p>\n
Associated British Foods (ABF) which also owns Primark, Ryvita and Twinings, said it would cut costs to make the two currently loss-making businesses profitable.<\/p>\n
The Unite union represents workers at Hovis and Kingsmill and warned it would “not tolerate attacks on jobs, pay or conditions”.<\/p>\n
Warburtons is the current market leader in UK breadmaking and the deal would need approval from the competition watchdog in order to go ahead.<\/p>\n<\/div>\n
Sales of Kingsmill and Hovis loaves are thought to have fallen flat due to a drop in demand for basic pre-packaged bread, as speciality breads such as sourdough and ciabatta took a bigger slice of the market.<\/p>\n
Sandwiches and toast are also off the menu for some British consumers who are cutting back on carbohydrates in favour of high-protein diets.<\/p>\n
ABF told investors on Friday it had reached an agreement to buy historic brand Hovis from private equity owner Endless. The BBC understands the deal is worth an estimated \u00a375m.<\/p>\n
It said the combined business would be “better placed to compete effectively” and to create new products “as a result of changing consumer tastes and needs.”<\/p>\n
ABF’s Allied Bakeries business, which makes Kingsmill and Allinson’s bread, first confirmed talks over a potential deal three months ago.<\/p>\n
Hovis, which was founded in 1890, was bought by Endless in 2020 from Premier Foods, which owns the Mr Kipling brand.<\/p>\n
ABF said the deal would lead to “significant costs synergies and efficiencies” in an effort to create a sustainably profitable bread business.<\/p>\n
George Weston, chief executive of ABF said: “This solution will create value for shareholders, provide greater choice for consumers and increase efficiencies for customers.”<\/p>\n
But Unite general secretary Sharon Graham said: “While there is still a long way to go before any buyout happens, Hovis and Kingsmill must ensure that jobs are protected.”<\/p>\n
She said Unite would be working to ensure the two brands fully involve the union in any decisions that impact its members.<\/p>\n
The deal requires approval from the Competition and Markets Authority.<\/p>\n<\/div>\n