Primark Owner ABF Confirms Talks About Potential Deal for its Allied Bakeries Business

Associated British Foods (LON: ABF), the owner of Primark and Kingsmill, confirmed on Monday that it is in discussions with private equity firm Endless LLP regarding a possible transaction involving its Allied Bakeries business.

The statement follows a report from Sky News which suggested that ABF and Endless—owner of rival bread brand Hovis—have held prolonged talks about a potential deal. 

A merger between Allied Bakeries and Hovis would bring together two of the U.K.’s most prominent bread producers. It would come at a time when the market for packaged loaves continues to contract.

ABF said: “There is no certainty that a transaction will be concluded nor as to the terms of such a transaction.”

The group added that Allied Bakeries “continues to face a very challenging market.” They added that it is “evaluating strategic options” for the business. 

ABF reiterated its commitment to long-term shareholder value, suggesting a final decision has yet to be made.

If completed, Sky News suggested that any deal would likely attract scrutiny from competition regulators. This is due to the scale and prominence of the brands involved. 

City sources cited by Sky News indicated that both companies have appointed advisers to explore the deal structure. Possibilities are also said to include ABF acquiring Hovis.

ABF reported last week that Allied Bakeries remains under pressure. It is also said to be considering alternatives beyond a merger with Hovis.