Cadbury has hit back at Kraft Foods’ GBP10.2bn (US$16.76bn) takeover bid and claimed the US food giant’s offer “fundamentally undervalues” the UK confectionery group.

Kraft announced its cash-and-share offer for Cadbury this morning (7 September) and said the deal would create “a global powerhouse in snacks, confectionery and quick meals with a rich portfolio of iconic brands”.

However, the Dairy Milk chocolate and Trident gum maker said it had “recently received an unsolicited proposal” from Kraft but rejected the offer.

“The board believes that the proposal fundamentally undervalues the Group and its prospects,” Cadbury said in a statement to the London Stock Exchange.

Kraft has insisted it can build on Cadbury’s recent work to boost margins and drive efficiency, which the UK firm has undertaken through a programme dubbed ‘Vision into Action’.

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However, Cadbury insisted it was confident in its ability to grow further as an independent company.

“The board is confident in Cadbury’s standalone strategy and growth prospects as a result of its strong brands, unique category and geographic scope and the continued successful delivery of its Vision into Action plan,” the company said.

Industry watchers have offered mixed reactions to the news, with some urging the companies to come together and others questioning the US food giant’s M&A record.

Shares in Cadbury leapt this morning, climbing almost 39% to 789p at 09:28 this morning.