Kraft''s $16.7 billion bid for Cadbury rejected

Kraft Foods Inc. disclosed that it has bid $16.7 billion to purchase Cadbury PLC, but the British company has rejected the offer, reported by the Chicago Tribune. Still, Kraft, the world''s second largest packaged food company and maker of everything from Oreo Cookies to Oscar Mayer meats, is undeterred, saying it will continue to pursue a deal for Cadbury, one of Britain''s most well known companies. Kraft offered 745 pence, or about $12, for each Cadbury share, a 31 percent premium to Cadbury''s most recent closing price. The deal would be the largest acquisition for Kraft since it bought Nabisco for $19.2 billion in 2000. And it would add about $8 billion in annual revenues to Kraft, which last year had $42 billion in sales. There''s been speculation for over a year that Kraft might make a run at Cadbury, which had a 10.3 percent share of the world confectionary market in 2008, second only to Mars Inc. with 14.8 percent. Kraft, which counts Toblerone, Milka and Cote d''Or among its main chocolate brands, was a distant fifth at 4.5 percent, and it has little presence in the U.S. confectionary market. Kraft also has little presence in the relatively fast-growing gum business: Cadbury, with its Trident and Dentyne brands, commands about a 28 percent share of the world''s gum market. There''s been speculation that Cadbury would be a takeover target since it spun off its beverage operations last year into a new company, Dr. Pepper Snapple Group. With Kraft''s bid, Cadbury could attract other candy industry suitors. Kraft''s offer for Cadbury is 40 percent in cash, and 60 percent in equity.