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PRIMARK’S London-listed parent company is set to make a huge deal to buy a 135-year old business.
The deal that will unite brands Kingsmill and Hovis under the same ownership is expected to be announced by the end of the week.
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Associated British Foods (ABF), which is the London-listed parent of Primark, are set to pay about £75 million to acquire Hovis, according to Sky News.
The final touches of the landmark transaction between ABF and private equity firm Endless are reported to have been put in place on Wednesday.
It will see ABF acquire the 135-year-old brand, with an announcement likely to come at the end of the week.
The timeline, however, is subject uncertain and subject to delay as warned by banking sources.
The second and third largest suppliers of packaged bread in Britain’s major supermarkets will as a result come together in this deal.
The move is therefore likely to ignite lengthy reviews from competition regulators.
Sources in the industry have suggested that as a combined group, benefits of up to £50 million in annual cost savings could be made from the merger.
The overall bakery market in the UK is estimated to be worth around £5 billion in annual sales, which equates to roughly £11 million loaves of bread sold each day.
ABF owns Kingsmill’s parent, Allied Bakeries, that has been struggling in recent years.
Challenges have been linked to continual price inflation, changing consumer preferences and competition from other large rivals like Warburtons, as well as new entrants into the market.
Family-owned business, Warburtons, is the largest bakery in the UK, with an estimated 34% share of the branded sliced breads.
Hovis holds 24% and Allied Bakeries 17%, making their merger give them the largest segment of the market.
Jon Jenkins, who is the current chief executive of Hovis, is also a former boss of Allied Milling and Baking.
Prior to being owned by Endless, Hovis came under Premier Foods which also makes Mr Kipling, and the Gores family.
The Hovis brand has a deep history, dating back to 1890, when its name was derived from the Latin ‘Hominis Vis’ meaning ‘strength of man’.
ABF has been seeing a number of changes in its brands, particularly with Primark recently.
The merger from Primark’s owner comes just months after the retailer introduced click & collect services in all its 187 stores across the UK.
They also opened a brand new type of store, called Primark Home.
The new iteration of Primark Home came just in time for the summer, and is dedicated to interiors for shoppers want a new range of homeware.
The retailer also launched it’s app for the first time in the UK just this week, with some greatly-anticipated features.
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