In a  move to create "a global powerhouse in snacks, confectionery and quick meals," Kraft Foods, the world's second-largest food maker with annual revenues of $42 billion, has offered to buy UK confectionery company Cadbury for £10.2 billion ($16.7 billion).
 
 
 
Kraft is offering 300 pence in cash and 0.2589 new Kraft shares for every Cadbury share, valuing each Cadbury share at 745p, a premium of 31 per cent over its closing share price of 568p on Friday.
 
Kraft estimates the deal could save at least $625 million a year in distribution, marketing and product development costs.
 
Rejecting the approach, Cadbury said it "fundamentally undervalues" the company. Cadbury said its "strong brands, unique category and geographic scope" left it confident of its future as a standalone firm.
 
As well as the iconic Dairy Milk, Cadbury also owns the Green & Black's chocolate brand, Halls lozenges, Trident and Dentyne gum brands, and Liquorice Allsorts maker Bassett's.
 
Kraft's brands include Kenco and Maxwell House coffee, Oreo biscuits, Jacobs, Terry's Chocolate Orange and Toblerone as well as cheese products such as Philadelphia and Dairylea.
 
Cadbury announced plans last year to slash 15 percent of its workforce worldwideÔÇöequivalent to 7,800 jobsÔÇöin a drive to cut costs.
 
In a letter to Cadbury's, Kraft chairman Irene Rosenfeld said that a takeover would save CadburyÔÇÖs Somerdale factory in Keynsham, near Bristol, which would otherwise close next year, and allow further investment in its flagship factory in Bournville, Birmingham, "thereby preserving UK manufacturing jobs".
 
She added that Cadbury's brands were "highly complementary" to KraftÔÇÖs portfolio and "would benefit from Kraft Foods' global scope and scale and array of proprietary technologies and processes".
 
"As we have done, Cadbury has built wonderful brands by focusing on quality, innovation and marketing, but we believe the next stage in Cadbury's development will be challenging, given the increased importance of scale in the industry," she said.
 
John Cadbury, a Quaker, opened his first shop in Birmingham in 1824, selling tea, coffee and hot chocolate as an alternative to alcohol. The Dairy Milk brand appeared in 1905, with Milk Tray following ten years later.
 
Cadbury merged with Schweppes in 1969, but the drinks unit was spun off in 2008.
 
Kraft was founded in Illinois as a cheese wholesaler in 1903. It was acquired by Philip Morris in 1988, which also purchased Nabisco in 2000 before integrating it into Kraft Foods.
 
 
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