The battle for the future of chocolate and candy maker Cadbury is becoming increasingly bitter.

Over the weekend, the UK confectioner stepped up the defence of its business in the wake of the proposed GBP10.2bn (US$16.9bn) takeover offer from Kraft Foods. On Saturday, Cadbury published a letter from chairman Roger Carr to Irene Rosenfeld, his counterpart at Kraft, which contained a staunch justification of the Dairy Milk maker’s strategy, a robust rebuttal of the US food giant’s approach and fierce criticism of its suitor’s business model.

Labelling Kraft a “low-growth conglomerate”, Carr told Rosenfeld that Kraft had presented Cadbury shareholders with a proposal of “uncertain value”. As a stand-alone, “pure-play confectionery” company, Cadbury could give “optimum value” for its shareholders, Carr insisted. The publication of Carr’s letter follows a week in which Kraft tabled its proposal (rejected by the Cadbury board) and in which Rosenfeld then spent trying to convince investors that the UK group’s potential to grow independently was “constrained”. It also followed a week of fevered speculation over whether the likes of Nestle and Hershey would also enter the fray.

There has, as yet, been no public proposal from Vevey or Pennsylvania and, at the time of writing, the most likely next twist in this tale is a second, higher offer from Kraft. Uncertainty over how Kraft could fund a more expensive bid abounds, although Rosenfeld has been quick to brush off speculation that the Dairylea cheese-to-Oscar Mayer meats maker may have to sell off other assets to raise the cash. Indeed, with Warren Buffett’s Berkshire Hathway a major Kraft shareholder, perhaps the US group has all the funds it needs. And a hefty premium to its initial proposal may be needed to soothe relations with a clearly irked Cadbury.

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