Associated British Foods and Hovis’ have asked the UK’s competition watchdog to accelerate the review process of their proposed merger.
Confirmed by the Competition and Markets Authority today (8 January), a spokesperson for the CMA said: “We have accepted ABF and Hovis’ request to fast-track our investigation into their merger to an in-depth Phase 2 inquiry, allowing the CMA to move at pace to an examination of the evidence by an independent inquiry group of experts.”
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ABF agreed to acquire the Hovis bread business from UK-based private-equity owner Endless in August. The transaction would combine two major branded suppliers in the UK bread market.
Aidan Robson, a managing partner of Endless, implied at the time that the transaction would need approval from the CMA.
“While we work towards achieving CMA clearance of the transaction, our focus remains on Hovis to continue delivering exceptional products and service to its customers,” he said.
The ABF and Hovis’ request sidesteps the initial Phase 1 inquiry that the CMA would normally launch to assess any competition concerns. A more in-depth Phase 2 investigation then follows if it deems those concerns are warranted.
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By GlobalData“Today’s step does not involve formal findings on any competition issues, and we will carry forward evidence gathered to date, with opportunities for further engagement and consultation during Phase 2,” the CMA statement added.
The Phase 2 investigation begins immediately with a statutory deadline of 24 June.
Separately, ABF issued a trading update today for the 16 weeks to 3 January.
In terms of its grocery or food unit – ABF owns the Primark retail stores – the company said: “Our food businesses experienced mixed trading in the period, particularly in the US where consumer demand in certain categories has continued to weaken.”
Ahead of the final results for the period, it said: “In our cooking oils and bakery ingredients businesses this year, the impact has been more acute than anticipated and we are more cautious on the outlook. As a result, we now expect both our grocery and ingredients segments to deliver adjusted operating profit for the full year that is moderately below last year.
“In grocery, the effect of phasing means the impact will be more significant in the first half of the year.”
