Associated British Foods (ABF) has announced a deal to acquire Hovis Group from Endless LLP for an undisclosed amount.

The move follows a strategic review by ABF of its UK bakery business, Allied Bakeries.

ABF revealed that profitability at Allied Bakeries had become “increasingly challenged” in recent years, due to a decline in demand for pre-sliced, packaged bread and a loss of scale in Allied Bakeries’ nationwide distribution network that had served the major retailers with daily delivery of bread and bakery goods.

Following this review, ABF has reached an agreement to acquire Hovis in a transaction that will combine both production and distribution activities. ABF is hoping the move can drive “significant costs synergies and efficiencies”, to create a profitable and sustainable UK bread business over the long term.

ABF chief executive, George Weston, said: "This transaction will create a UK bakeries business that is both profitable and sustainable over the long term. Supporting the Hovis and Kingsmill brands with well-invested and efficient operations will also enable innovation and growth.

“This solution will create value for shareholders, provide greater choice for consumers and increase efficiencies for customers.”

Completion of the transaction remains subject to regulatory approval.

---