Two of Britain’s oldest bread brands in bombshell merger talks to combine their bakeries

TWO of Britain’s oldest and best-known bread brands reckon they might make more dough if they combine their bakeries. 

Kingsmill owner Associated British Foods yesterday confirmed it was in talks with the owner of Hovis. 

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Hovis, which is still known for its classic boy on a bike advert, traces its roots to 1886. 

It was bought by Endless, a turnaround firm, from Bisto-maker Premier Foods five years ago. 

The talks come a week after ABF said that it had launched a strategic review of its Allied Bakeries business, which includes Kingsmill, amid slowing sales and a squeeze on profits. 

Bakeries have been struggling for the past decade as health- conscious Brits are eating less white bread, opting for breakfast cereals instead of toast. Non-gluten diets have also been on the rise. 

Brits now eat half the amount of bread they did 50 years ago, according to recent research. 

A combination between Kingsmill and Hovis would see the combined company overtake current market leader Warburtons, which has boosted its sales with crumpets, wraps and muffins as loaf sales falter across the industry. 

Meanwhile, intense competition in supermarkets has also limited the ability for bread-makers to increase prices as shoppers often use the price of a loaf of as an indicator for whether or not a supermarket is more expensive than a rival. 

ABF said: “Allied Bakeries continues to face a very challenging market. We are evaluating strategic options for Allied Bakeries against this backdrop and we remain committed to increasing long-term shareholder value.” 

The potential deal has been called “survival through scale” by Anubhav Malhotra, an analyst at Panmure Liberum, who said that the two companies may “struggle to remain viable independently”. 

He said: “Allied Bakeries has faced ongoing challenges amid a highly competitive UK bakery market, characterised by competition for volumes, a price-sensitive consumer and retail landscape conditions under which Hovis also reported an operating loss last year.” 

Allied Bakeries, founded in 1935, makes around £400million in sales a year, but is thought to have made a loss of £30million in 2023. 

By comparison, Hovis made revenues of £478million and an operating loss of £3.5million. 

Meanwhile, rival Warburtons made a £34.3million profit on £711million of sales during the same period. 

However, a combination of Kingsmill and Hovis would likely attract scrutiny from the Competition and Markets Authority. 

Deliveroo swallowed up 

THE boss of Deliveroo yesterday shrugged off the takeaway company’s bumpy ride on the London stock market as it was swallowed by a much larger American rival. 

Doordash bought the firm for £2.9billion — just over a third of what investors paid to back its £7.6billion London listing four years ago. 

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Will Shu, who founded Deliveroo in 2013, told The Sun “shares go up and shares go down”, adding: “I’m proud of what we have achieved as a company.” 

Shares in Deliveroo crashed after its stock market debut in 2021. Despite expanding its business into delivering goods for supermarkets, the firm has never clawed back to its listing price. 

Mr Shu, an ex-banker, will make around £185million from cashing in his shares in the takeover and could stay with the business. 

Staff, who own 36million shares, will share a £65million windfall. 

But up to 800 jobs may be at risk as a result of the takeover. 

Amazon, which bought a 13 per cent stake in Deliveroo when it was valued at £5.2billion, declined to comment. 

The shelf hackers 

THE CO-OP said it was “working around the clock” to battle a cyber attack that has left gaps on shelves and payment problems in stores. 

It has been hit by the same hackers as M&S, which has been impacted since Easter and cannot take online orders. 

The Co-op admitted a “small number of stores” could only accept cash after problems with contactless payments on Monday and yesterday.

Some have missing items, because deliveries have not arrived as stock ordering systems have been taken offline. 

Services in slump 

THE UK’s service sector has shrunk for the first time in a year and a half as uncertainty from Trump’s tariffs triggered overseas firms to halve orders. 

The purchasing managers index (PMI) hit 49.0 in April, down from 52.5 in March. Under 50 shows contraction. 

New work from abroad fell at its fastest rate since February 2021. And smaller services firms also highlighted higher costs and staff reductions caused by the Budget. 

More than a fifth expect activity to fall in the next year. 

Tim Moore at S&P Global Market Intelligence said: “Heightened uncertainty weighed on order books.” 

Car sale nosedive 

SALES of new cars slumped by more than 10 per cent last month on the back of changes to tax rules for electric cars. 

According to the Society of Motor Manufacturers and Traders, 120,331 new vehicles were registered in April. 

The industry blamed the fall on people rushing to buy electric vehicles earlier in the year before a tax deadline that added £425 a year to the cost of “expensive cars” from April 1. 

Electric car registrations still rose by 8 per cent in April, but their market share is significantly below the Government’s Zero Emission Vehicle Mandate.