Updated from 12:14 a.m.
offered 10.2 billion pounds ($16.7 billion) to buy
, but the British candy maker rejected the bid.
In a statement, Cadbury's board said Kraft's offer "fundamentally undervalues" Cadbury and its prospects. The board added Monday that it's confident in the company's standalone strategy.
Kraft seems intent on a transaction, however. Following Cadbury's rejection of the offer, the Northfield, Ill.-based food company said it is "committed" to working toward a deal that Cadbury can accept.
Kraft said the proposed deal would create a "global powerhouse" in snacks, confectionary and quick meals, with a geographically diversified business and leading positions in developing markets such as India, Mexico, Brazil, China and Russia.
Cadbury shares surged more than 42% to 808 pence ($13.20) in London before closing at 783 pence ($12.79), up nearly 38% from Friday's close of 568 pence ($9.30). The 800-pence level is consistent with what British analysts said Kraft would eventually have to pay to seal a deal, the
The candy maker's U.S. shares didn't trade Monday because U.S. stock markets were closed in observance of Labor Day. The U.S. shares will play catch-up when U.S. markets reopen Tuesday. Gains similar to the ones in London would boost Cadbury's U.S. shares to more than $51 from their Friday close of $37.46.
Kraft said it offered 300 pence ($4.91) in cash plus 0.2589 new Kraft Food shares for each Cadbury share. That values Cadbury shares at 745 pence ($12.20), a 31% premium over Cadbury's London closing price on Friday.
Kraft's offer is one more indication that dealmaking is heating up after a long cold spell in the wake of last year's financial crisis. Last week,
, oilfield services company
and a group of private equity investors
On Tuesday, it was confirmed that
were merging their
With a 10.3% share of the world confectionary market in 2008, Cadbury ranked No. 2 behind Mars, which had 14.8%, the
noted. Kraft was fifth with 4.5%.
Graham Jones, an analyst at Panmure Gordon & Co., recommended that shareholders hold out for at least 800 pence ($13.10) a share, the
"A key question is whether there is a counter bid, most likely from a
-led consortium," Jones was reported saying. "However, we see the most likely scenario being Kraft being successful on improved terms."
Others see a significant threat to Kraft's bid coming from Nestle and others.
"Speculation is already mounting that
and Nestle may come together in one form or another to counterbid, with Nestle potentially interested in Cadbury's gum business and Hershey in the chocolate-confectionery brands, with other interested parties," said Darren Shirley, analyst at Shore Capital, who was quoted by the
Wall Street Journal
, citing one person familiar with the matter, said Monday that Hershey "is likely to make some response."
-- Written by a staff member of TheStreet.com