Kraft to raise Cadbury bid

Kraft said it had a 1.52 per cent take-up from Cadbury shareholders for its £10

Kraft said it had a 1.52 per cent take-up from Cadbury shareholders for its £10.5 billion hostile bid, with analysts saying the US food group will have to raise its offer to win.

Kraft said todayit had received the acceptances by its first closing date of 1pm on January 5th and its offer remained open until February 2nd.

Most investors will likely be waiting until a January 19th deadline for Kraft to raise its bid before deciding whether to accept, with analysts saying a price over 800 pence per share would be needed for Kraft to succeed.

Kraft's cash and shares bid is currently worth 765 pence per Cadbury share or £10.5 billion, against a current share price down 0.8 per cent at 773 pence by 1020 GMT.

"Kraft will have to offer at least 810 pence to attract acceptances from current Cadbury shareholders," said analyst Dirk Van Vlaanderen at Jefferies International.

Martin Dolan at Execution Research said Kraft will have to offer over 800 pence to encourage Cadbury to let it see its books and believes Kraft could pay an extra 60 pence per share.

Yesterday, a warning by Kraft's biggest shareholder, Warren Buffett, and Swiss food group Nestlé's announcement it would not make a rival bid pushed Cadbury shares lower and Kraft stock higher.

Mr Buffett said he would vote against Kraft's proposal to issue 370 million new Kraft shares to fund its Cadbury bid unless he was convinced it did not destroy shareholder value.

Mr Buffett's intervention and Nestlé's decision has narrowed the premium of Cadbury's share price to the bid price to around 1 per cent from nearly 10 per cent on Monday.

Under Britain's takeover rules, Kraft has until January 19th to raise its bid while Cadbury shareholders have until February 2nd to accept.

Potential bidders for Cadbury who have expressed an interest publically, Hershey and Italy's Ferrero, have until January 23rd to come up with fully financed bids or withdraw.