Will Kraft Sweeten Cadbury Bid?

Cadbury has wasted no time shooting down Kraft’s $16.3 billion bid. But that doesn’t mean the American company’s efforts to gain control of the British confectioner are over or that there may not be another American suitor lining up a play for Cadbury.

Kraft made its cash and stock bid, a 31 percent premium over Cadbury’s Friday close, public on Monday, after Cadbury had already turned it down. Sources tell the Wall Street Journal that Cadbury chief Todd Stitzer sees the Kraft bid as an attempt to take advantage of temporary undervaluation at Cadbury. But that undervaluation may not last if a bidding war emerges, as many expect.

Shares of Cadbury shot up 41 percent Monday on traders’ expectations that Kraft wouldn’t be the only one to show up on Cadbury’s doorstep with a bouquet and some chocolates.

Other possible players in a bidding war for Cadbury include such rival candy companies as Hershey or Nestle.

A source tells the Journal that Hershey “is likely to make some response” to the Kraft bid. Hershey sees that Cadbury is “the last major confectionery company potentially available.”

Or Kraft could sweeten its offer. A combination between Kraft, the maker of Oreos and Toblerones, and Cadbury, maker of chocolates and Trident gum, could create a rival to Mars Inc., which bulked itself up with last year’s purchase of the Wm. Wrigley Jr. Co.