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Kraft to Buy Cadbury for $19.5 Billion

Updated from 4:13 a.m. EST

LONDON ( TheStreet) -- Kraft Foods (KFT) has agreed to buy Cadbury (CBY) in a deal valued at about 11.9 billion pounds ($19.5 billion).

Kraft, in a statement to the London Stock Exchange, said the offer values Cadbury at 840 pence a share. Cadbury shareholders also will be entitled to a special dividend of 10 pence a share.

Kraft will pay 500 pence a share in cash and 0.1874 a Kraft share for each Cadbury share.

Cadbury believes the offer represents good value for its shareholders, according to Chairman Roger Carr.

Kraft's previous offer for Cadbury was valued at a little more than $17 billion, an offer that Cadbury had called "derisory" and "unattractive."

Kraft said it expects pretax cost savings of at least $675 million a year by the end of the third year after the merger is completed.

Kraft had a deadline imposed by U.K. regulators to make a final takeover offer for the British candy and gum maker by the end of Tuesday.

The $19 billion price tag could put an end to efforts by Hershey (HSY - Get Report) to make a run at Cadbury. Reports over the weekend said Hershey was planning to bid at least $17.9 billion for Cadbury.

Hershey has until Saturday to decide if it wants to launch a bid.

-- Reported by Joseph Woelfel in New York.

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