Kraft8217;s 16.7 bn bid for Cadbury rejected

Kraft Foods Inc. proposed a 10.2 billion pounds 16.7 billion takeover of Cadbury PLC.

Kraft Foods Inc. on Monday proposed a 10.2 billion pounds 16.7 billion takeover of Cadbury PLC,but said the offer was immediately rejected by the British maker of chocolate,gum and candy.

Kraft was undeterred,however,and said it would continue to seek a transaction which Cadbury8217;s board could support. Cadbury shares shot up 34 percent to 760 pence on the London Stock Exchange.

Kraft,whose brands include Velveeta cheese product and Oreo cookies,said it had proposed paying 300 pence in cash and 0.2589 new Kraft Foods shares per Cadbury share,valuing Cadbury shares at 745 pence.

That represents a 31 percent premium over Cadbury8217;s closing share price of 568 pence on Friday.

Cadbury,which makes Cadbury chocolates,Trident and Dentyne gum and Halls and Bassett8217;s candies,did not immediately comment.

Kraft,based in Northfield,Illinois,said the combination would create 8220;a global powerhouse in snacks,confectionery and quick meals,8221; with leading positions in developing markets including India,Mexico,Brazil,China and Russia.

8220;This proposed combination is about growth. We are eager to build upon Cadbury8217;s iconic brands and strong British heritage through increased investment and innovation,8221; said Irene B.

Rosenfeld,chairman and CEO of Kraft Foods.

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Cadbury,nearly tripled its net profit in the first half of the year as the company pocketed a big gain from the sale of its beverage business and chocolate consumption rose.

Net profit in the first half was 313 million pounds,compared to 113 million pounds during the same period a year earlier. Revenue was up 13 percent to 2.8 billion pounds,or up 4 percent on a constant currency basis.

The company,formerly Cadbury Schweppes,demerged its Americas Beverages business last year and disposed of its Australia Beverages business to Asahi Breweries of Japan in April.

Kraft 8216;s second-quarter profit rose 11 percent to 827 million,though revenue fell 5.9 percent to 10.16 billion as the dollar8217;s strength weighed on international sales.