Sky News has reported that Patisserie Holdings is drawing up plans for a share issue to raise around £35m to acquire Bread Holdings.
The deal, which Sky says is unlikely to be reached before March, would bring together two companies backed by serial hospitality investor Luke Johnson.
Johnson owns 39% of Patisserie Holdings and a majority stake in Bread Holdings, and according to Sky will stand back from the negotiations to avoid a potential conflict of interest.
Bread Holdings, which includes Gail’s and wholesale business Bread Factory, is valued at around £150m.
According to MCA's Branded Bakery Market Analysis, sales in the bakery segment were predicted to grow 3.6% in 2017, with the market set to reach a value of £1.4bn.
Gail’s opened its first bakery in Hampstead in 2005 and now operates over 30 sites across London and in Hove, Farnham and Oxford.
Johnson acquired a share of the company in 2011 and is also chairman and part-owner of numerous businesses including 3Sixty Restaurants and The Brighton Pier Group.
He was chairman of PizzaExpress from 1993-1999, during which time he grew the group from 12 to over 150 sites, and created the Strada restaurant chain in 2000.