Associated British Foods has received unconditional approval from the Competition and Markets Authority to acquire Hovis, ending an extensive investigation and allowing the owner of Kingsmill to combine two of Britain’s best-known bread brands. The CMA’s independent investigation team published its final report on 16 June 2026, concluding that the deal would not significantly reduce competition across the UK, including Northern Ireland where the regulator had previously raised the alarm.
The decision addresses the critical situation of the plant-based bread industry. The CMA found that ABF’s bakery arm, Allied Bakeries, had made significant losses over the past 14 years and would likely have exited the market if the merger had been blocked, displacing rivals. ABF, which makes up the Kingsmill and Allinson companies, agreed in August 2025 to buy Hovis from private equity firm Endless and combine the production and distribution of Hovis with Allied Bakeries. The watchdog opened its investigation in December 2025 and accelerated it to a Phase 2 investigation in January 2026 under powers introduced by the Digital Markets, Competition and Consumers Act 2024.
The approval brings to a close a regulatory process that took almost six months and removes a major risk of execution hanging over one of the UK’s most watched deals of the year for shoppers. ABF, the regional FTSE 100 with interests in Primark, sugar, groceries and ingredients, had argued that an acquisition was the only route to a profitable bakery business that could invest in innovation. The deal leaves Warburtons as the main remaining competitor in a market characterized by structural decline, as consumers switch to sourdough, bagels and other protein-enriched options.
The case provides a clear illustration of the “failing company” mentality that is increasingly prevalent in UK merger control. The CMA has accepted that competition is better served by mergers than by the collapse of a loss-making operator, a weighty conclusion for any board considering M&A in a declining sector. Financial directors weighing deals in mature or declining sectors should be aware of how the medium-term financial evidence – losses, exit conditions, absence of other buyers – has shown to secure approval.
Re-examination of deal feasibility is now facing finance teams and business development functions across consumer goods, where margin pressure and price declines are pushing competitors to merge. The ABF-Hovis result shows that the CMA will clear even market-focused mergers where there are false closures and job losses, as long as the evidence is strong. Investors in depressed or contracting markets will scrutinize this decision as they build the financial case for their operations, and advisers will take it as a useful precedent for how far the current default defense can stretch.
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