Kraft Goes Hostile for Cadbury

Kraft Foods (KFT) has gone hostile in its bid for the British confectioner Cadbury (CBY), sticking to the original bid of $16 billion it made in September.

While some analysts think Kraft might still bump up its bid somewhat, it is unlikely to go high enough to satisfy Cadbury's management, which has clumsily reacted to the bid since it was proffered.

One disappointed holder of Cadbury shares, fund manager William Hobbs of Barclays Wealth, told Bloomberg News this morning that anything less than about $26 billion "is still a pretty chunky discount to what we could get."

Except that nobody other than Kraft has expressed an interest in Cadbury so far, and there are few potential competing bidders out there. What Cadbury holders "could get" might be not much more than Kraft is offering right now.

Acquiring Cadbury would make Kraft the world's biggest candy maker, larger than Mars.

Cadbury management swiftly rejected today's hostile move, noting that Kraft's offer has actually dropped in value as its stock has fallen since the initial bid. That sets the stage for "what could be a lengthy tussle for control of the British confectioner," as the Wall Street Journal put it.