Its owners, 2 Sisters Food Group, confirmed that the site has been sold.
A spokesperson said: "It is proposed to operate the business under a new company, Food Utopia Ltd, which will aim to secure continuing operations. We will now commence the TUPE transfer process of colleagues."
It's very sad to hear that Avana Bakeries in Newport is set to close. The company's employees and their families will naturally be very concerned by the potential loss of a significant number of jobs and the impact it could have on the local community. We are committed to working with Avana Bakeries, the Welsh Government and Jobcentre Plus, to offer all the support we can at this difficult time. Employees who may be affected by today's announcement should contact Jobcentre Plus where they will be able to receive further help and advice.
Local Assembly Member, Rosemary Butler, has described the closure of Avana bakery as "absolutely devastating".
Having spoken to senior management I understand it will be a phased closure with no jobs being lost in the immediate future. However, the losses are due to start towards the summer of 2014.
This is a sad day for the loyal workforce and for Newport as a whole. The business has been an integral part of the local community for many years and I am disappointed that Avana was unable to secure a new contract to safeguard its future. Avana has confirmed that it will continue to fight to secure new contracts.
I will contact the Minister to ensure all possible advice and support will be available from the Welsh Government for those affected.”
Marks & Spencer says it will do "all it can" to support Avana Bakeries following its decision to use another cake supplier.
A spokesperson said: “As part of our work to further improve the quality of our food supply chain, we are consolidating some of our fresh desserts and cakes business and moving from two suppliers to one.
"It’s not a decision we’ve taken lightly and understand that it will have a significant impact for Avana Bakeries. We’ll do all we can to support the supplier through the process."
A spokesperson for Avana Bakeries in Newport has confirmed the majority of its 650-strong workforce is at risk of redundancy following the loss of its M&S contract to a competitor.
The spokesperson added there is also a risk the site could be closed.
Clearly this is a huge setback to our cakes business and our operations in Wales, but we are determined to work hard to reverse the situation.
As a matter of urgency, we are now making every effort to rebuild the business by seeking alternative customers and strategies which will minimise the impact of this contract loss.
Our immediate priority now is to have meaningful discussions with our colleagues during a minimum 45-day consultation period to explore all available options before taking the next steps. We are hopeful that we can retain our cakes business in Newport.
– Avana Bakeries statement
Oldham-based Park Cake Bakeries says it is pleased its partnership with M&S will continue.
A spokesperson for the business said: “Park Cake Bakeries has had a long and fruitful relationship as a supplier of quality cakes and desserts to Marks and Spencer and we are pleased that partnership will continue with the award of M&S’s cakes and desserts business, primarily to our site in Oldham.”