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Kraft Foods Inc. launched a 9.8 billion pound ($16.4 billion) hostile bid for Cadbury PLC on Monday -- refusing to sweeten a previous offer rejected by the British candy maker.
The terms of the cash-and-stock approach were left unchanged, effectively representing a lower offer for Cadbury investors because of a shift in share prices of both companies.

Cadbury immediately said no to the renewed approach, with chairman Roger Carr saying it "does not come remotely close to reflecting the true value of our company."

Kraft, the maker of Oreo cookies, Nabisco crackers and its namesake cheese, has taken the offer straight to shareholders.

It argued that the proposed deal, now valuing each Cadbury share at 717 pence, compared to the earlier 745 pence, "represents a substantial premium to the unaffected share price," referring to the price before the surge in the British company's stock after the initial bid was made public in September.

The offer represents 300 pence in cash and 0.2589 new Kraft shares, the same as earlier.

"We believe that our proposal offers the best immediate and long-term value for Cadbury's shareholders and for the company itself compared with any other option currently available, including Cadbury remaining independent," said Kraft Foods Chief Executive Irene Rosenfeld.

But Carr said that Cadbury was "an exceptional standalone business" with "strong iconic brands, a sharp category focus and an enviable geographic scope."

Carr added that a tie-up involved "the unattractive prospect of the absorption of Cadbury into a low growth conglomerate business model."

Cadbury's shares initially dropped as much as 2 percent after Kraft's announcement, but soon began to inch up again, suggesting that the market believes that the U.S. company's statement was only an opening gambit.

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