Shares up after Cadbury rejection

Shares in Birmingham-based sweets giant Cadbury were on the rise again today in the wake of its rejection of a £10.2 billion takeover offer from US food group Kraft.

Brokers and City analysts predict a fight for Cadbury, expecting other big sweet firms such as Nestle, Mars and Hershey to compete.

Kraft is likely to have to substantially increase its offer for Cadbury - possibly by another 40 per cent - to win over shareholders.

In the first hour of trading today Cadbury shares were up another 15.5p, to 798.5p.

Yesterday a Kraft 745p a share offer was rejected but speculation sent stock soaring way above that level - up 38 per cent or 215p to 783p, as traders bet on more takeover manoeuvring.

Cadbury is the world's number two chocolate and sweet maker, employing about 2,000 at Bournville, Birmingham.

Kraft says it will press on with its bid despite the snub. It is the world's second biggest food maker, after Nestle. Cadbury is seen as an attractive takeover target after New York investor Nelson Peltz - successfully agitated for it to spin off its Dr Pepper soft drink unit.

Cadbury's management were backed by major shareholder Legal & General Investment Management, which owns just over five per cent of Cadbury and said Kraft's offer was too low.

Head of equities Mark Burgess said they welcomed management moves to improve shareholder returns, and thought initiatives had much further to run. Noting other recent food transactions, they said Kraft materially undervalued Cadbury and backed management's rejection .