That drew an immediate rejection from the British candy-maker in what is likely to be a lengthy takeover struggle.
Taking the same offer to shareholders that it sent in September to Cadbudy management likely means that Kraft is betting no competing bids will emerge for the maker of Dairy Milk and Creme Eggs.
Kraft made the offer to shareholders just hours before a deadline yesterday imposed by Britain's takeover law that required the company to make a formal offer or back off for six months. Kraft now has 28 days to file a prospectus, which will then trigger more deadlines that could last months.
Kraft, the maker of Oreo cookies, Oscar Mayer meats, and Nabisco crackers, maintained its offer of 300 pence (about $4.50 U.S) in cash and 0.2589 new Kraft shares. But the deal's value fell from its original $16.7 billion because Kraft's shares have fallen in price since the first offer was announced. The stock closed yesterday at $26.53 compared with $28.10 on Sept. 4, the last trading day before the first offer was announced.
Cadbury chairman Roger Carr offered a blunt assessment of the bid: "Kraft's offer does not come remotely close to reflecting the true value of our company."
Now it's now up to Cadbury's shareholders to decide.
Most likely, they will hold out for a higher offer, analysts said.
"Kraft probably does need Cadbury more than Cadbury needs Kraft," wrote Jeremy Batstone-Carr, an analyst with Charles Stanley.
He said Kraft would need to offer up to 850 pence per share, or its equivalent including more cash. Kraft's offer is worth only 709 pence per share, based on its share price and exchange rates yesterday.
Some traders had speculated that a bidding war could ensue when Kraft's initial offer was revealed in September - with a possible joint offer from Hershey Co. and the world's biggest food-maker, Nestle. But that did not happen, and the Dutch consumer-goods group Unilever NV publicly ruled itself out last week as a possible bidder.
"Kraft hopes the reality that a competitive bidder will not step forward and that this is the 'best deal in town' will convince Cadbury shareholders to vote in favor of this transaction," said Christopher Growe, an analyst with Stifel Nicolaus & Co.
A combination of the two would create a company with at least $50 billion in annual revenue.
Kraft is the largest food company in the U.S. and No. 2 worldwide to Nestle, which would keep its No. 1 position even if Kraft adds Cadbury.
Kraft has said it's confident in its future, whether or not it includes Cadbury. Growe said the deal for Kraft would make strategic sense "as a way to quickly correct its European business."
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