By Aimee Look

The U.K.'s competition watchdog asked Associated British Foods and Hovis to submit a remedy proposal as it probes the planned acquisition of the bread maker by the conglomerate.

The Competition and Markets Authority said AB Foods' Kingsmill brand is a direct competitor to the Hovis brand. Allied Bakeries--AB Foods' U.K. bakery operations and Kingsmill's parent company--and Hovis both also supply own-brand products in major U.K. supermarkets, the watchdog said.

Associated British Foods had struck an agreement last year to acquire Hovis.

The watchdog said its inquiry group provisionally found that if the merger didn't go ahead, Allied Bakeries would close. As competition would be lost regardless of the merger, an acquisition wouldn't substantially reduce competition in Great Britain, according to the group's provisional findings.

But there are potential competition concerns in Northern Ireland where there would have been an alternative purchaser of Allied Bakeries and therefore continued competition with Hovis, the CMA said.

Associated British Foods--which also owns retailer Primark--and Hovis were asked to submit a remedy proposal in the next two weeks, and the authorities said they will consult on it publicly then.

"We have been clear with the CMA that the transaction is the only route to creating a sustainably profitable business," AB Foods said in a statement. "The CMA has recognized that, if the transaction is not allowed to proceed, Allied Bakeries will be unable to continue operating under current market conditions."

Shares in AB Foods were down 0.1% at 1,834.50 pence in early morning trade in Europe. The stock is down 14% over the year to date.

Write to Aimee Look at aimee.look@wsj.com

(END) Dow Jones Newswires

March 26, 2026 05:02 ET (09:02 GMT)

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