The CMA has accepted the joint request following an unexpected trading update from ABF. This update has resulted in a downward revision of their anticipated performance for the year, indicating a year-on-year decline.
Consequently, the CMA now has until 24 June to deliver a verdict on the merger. Initially, the deadline for phase 1 was set for 19 February; however, the transition to phase 2 has the potential to expedite the process by up to six weeks.
The joint request from ABF and Hovis underscores a mutual recognition that a phase 2 investigation of their proposed merger was likely. As Julian Wilde, head of corporate finance at Wilkin Chapman Rollits points out: “The bread market is highly competitive with slim margins, adversely affecting both ABF and Hovis. This is a deal they both need and the sooner the better.”
In an official statement released today (8 January), the CMA clarified that the joint request allows ABF and Hovis to proceed without formally acknowledging that the merger might lessen competition within the UK pre-packaged bread and bakery goods market.
A CMA spokesperson remarked: “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.”
“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.”
Under the new process for fast-tracked cases, businesses are not required to concede anything. The members of the independent inquiry group will be announced shortly, accompanied by an indicative administrative timetable.
In light of the CMA’s announcement, an ABF spokesperson stated: “This transaction will deliver a sustainable, profitable bakery business that can invest in innovation and be a far more effective competitor to the benefit of consumers.”
“Our priority is to achieve regulatory clearance as efficiently as possible, and we are pleased to have agreed with the CMA to fast-track to the in-depth and detailed final phase of their merger review. We will continue to work constructively with the CMA to demonstrate the benefits of the transaction.”
