Cadbury in £10.2bn takeover approach

American food giant Kraft Foods has proposed buying the British confectionery firm Cadbury in a £10.2bn ($16.7bn) move. Kraft said an initial bid was rejected categorically by the UK confectionery group, which span off its Schweppes drinks division, last year.

Kraft said of the new proposal: "We are eager to build upon Cadbury's iconic brands and strong British heritage through increased investment and innovation. We have great respect and admiration for Cadbury, its employees, its leadership and its proud heritage."

A tie-up would see Cadbury, owner of the Dairy Milk chocolate and Bassett's sweet brands, combine forces with Kraft's Oreo biscuits and Terry's chocolate products and allow the new business to make vast economies of scale. Kraft said that the combined group would save $625m a year in distribution and development costs and would create a "global powerhouse in snacks, confectionery and quick meals".

There has been speculation over merger and acquisition in the food sector for some time now, and Kraft's eagerness to buy into the UK company is evident in the 31 per cent premium it was willing to pay for Cadbury shares, offering 745p for each share held. Kraft moved to quell concerns over British job losses, saying the deal would allow it to keep Cadbury's Bristol factory open, saving 500 jobs that are set to be lost next year.

Cadbury shares surged to 776p this morning on hopes of a higher bid or competitive approach. ·