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LONDON - Associated British Foods plc (LSE:ABF) has agreed to acquire Hovis Group Limited from Endless LLP, the company announced Friday in a press release statement.
The acquisition aims to combine the production and distribution operations of ABF’s Allied Bakeries with Hovis Group to create what the company describes as "a profitable UK bread business that is sustainable over the long term."
The transaction comes after ABF had been evaluating strategic options for Allied Bakeries, which has faced profitability challenges due to declining demand for pre-sliced, packaged bread and reduced scale in its nationwide distribution network.
According to the announcement, the combined business is expected to generate "significant costs synergies and efficiencies" and establish a platform for product innovation in growing segments of the UK bakery category. This will include improvements to existing products and expansion into new product ranges.
"This transaction will create a UK bakeries business that is both profitable and sustainable over the long term," said George Weston, Chief Executive of Associated British Foods. "Supporting the Hovis and Kingsmill brands with well-invested and efficient operations will also enable innovation and growth."
The deal, which would bring together two of the UK’s major bread brands, is subject to regulatory approval. Financial terms of the acquisition were not disclosed in the announcement.
Hovis Group is an integrated bakery business that produces and distributes bread and bakery products throughout the UK.
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