The UK’s Competition and Markets Authority (CMA) has cleared Associated British Foods’ proposed acquisition of Hovis, concluding that the deal does not raise competition concerns following an in-depth Phase 2 investigation.

The final decision, published on 16 June 2026, follows a detailed review of the UK bakery market and the financial position of both companies. Associated British Foods (ABF), owner of the Kingsmill brand through Allied Bakeries, and Hovis are among the UK’s largest suppliers of both branded and private-label bread products.

The CMA found that the UK bakery sector has faced significant structural challenges for many years. Declining bread consumption, rising energy costs, higher wheat prices and increasing distribution expenses have placed pressure on bakery manufacturers across the market.

According to the regulator, Allied Bakeries has recorded substantial losses over the past 14 years despite efforts to improve performance. The investigation also highlighted growing demand for lower-margin private-label products, which has added further pressure to profitability within the sector.

A key finding of the inquiry was that Allied Bakeries would likely exit the market in Great Britain and Northern Ireland if the transaction did not proceed. The CMA concluded that competition from Allied Bakeries would therefore be lost regardless of whether the merger went ahead.

As a result, the regulator determined that the acquisition would not lead to a substantial lessening of competition and approved the deal.

Why this matters for the UK private-label bread market

The CMA’s decision goes beyond a merger approval. Both Allied Bakeries and Hovis are major suppliers of private-label bread products sold by UK supermarkets.

During its investigation, the regulator found that bakery manufacturers have been operating under significant pressure from declining bread consumption, rising production costs and growing demand for lower-margin own-brand products.

The CMA concluded that Allied Bakeries would likely leave the market if the transaction did not proceed. This means the UK private-label bread market could have lost a major supplier regardless of the merger outcome.

For retailers, the decision helps preserve production capacity within a critical grocery category. For suppliers, it highlights the financial challenges facing bakery manufacturers and the increasing importance of scale, efficiency and long-term retail partnerships in the private-label sector.

The findings also provide a rare insight into the economics of the UK bread market, showing how cost inflation and changing consumer purchasing habits continue to reshape one of the country’s largest food categories.

The decision is significant for the UK’s private-label bakery market. Both Allied Bakeries and Hovis supply own-brand bread products to major supermarket retailers alongside their branded ranges. Their combined operations play an important role in maintaining production capacity across the country’s bread supply chain.

With regulatory approval now secured, ABF can move forward with the acquisition of Hovis, bringing together two major players in the UK bread market as the industry continues to adapt to changing consumer demand and economic pressures.

Editor’s Note: Information for this article was sourced from the UK Competition and Markets Authority’s final report and merger decision regarding Associated British Foods’ proposed acquisition of Hovis, published on 16 June 2026.