Associated British Foods, the group controlled by the Weston family, is ready to sell Allied Bakeries, its bread business, whose brands include Allinson and Mighty White.
The move is part of a wide-ranging shake-up of the group being planned by Peter Jackson, the chief executive, and John Bason, the recently appointed finance director. The giant food group, which fell out of the FT-SE 100 Index earlier this month, is being targeted by potential bidders hoping that the Weston family will sell its 57 per cent interest.
Allied Bakeries has been restructured under George Weston, the son of Associated's chairman Garry. However, Allied is already Britain's biggest baker, and competition concerns suggest that it has little prospect of increasing its market share significantly.
Associated's bakery business is sure to attract interest from a number of venture capitalists. American group Hicks, Muse, Tate, Furst and France's Paribas Capital - the companies that have jointly acquired United Biscuits - would both be interested. They are currently the front runners in the race to buy RHM, Tomkins' food arm, which includes the UK's second largest baker, British Bakeries. Due to regulatory requirements, whichever company succeeded in buying RHM would be unable to buy Allied Bakeries as well.
Hicks, Muse has teamed up with Irish food products group Greencore in its bid for RHM and the pair would probably work together on an approach to Allied Bakeries. Other interested parties may include Doughty Hanson and CVC, the other two venture capitalists in the running to buy RHM, and Candover, which is rumoured to be interested in Unigate.
Venture capitalists are also interested in acquiring Associated in its entirety. The fate of Associated may rest on the health of Garry Weston, who suffered a stroke last year but is poised to return to work.
The sale of its bakery arm would form part of Associated's attempts to remind the stock market of the value of its business after a year that has seen its shares tumble almost 30 per cent and its departure from the FT-SE 100.