The Dairy Milk manufacturer’s shares rose to 796p a share on the London Stock Exchange.
According to a report in the Financial Times on Wednesday, citing sources close to the situation, a formal offer for Cadbury by Hershey could be delivered by 23 January, with the US confectioner hoping to raise the additional financing needed for such a deal through private equity firms.
Hershey already has an affiliation with Cadbury in the fact that it manufactures the leading Cadbury brands, Dairy Milk and Creme Eggs, under licence in the US.
However, Kraft is widely expected to increase its bid to get shareholders on side by a January 19 deadline imposed under British takeover rules. Shareholders would then have until February 2 to accept the deal. If Kraft failed to win over at least 50 per cent of Cadbury shareholders by then it would have to wait a year before it could bid again.
The global food group recently sold its frozen pizza business to Nestlé to help fund its offer for Cadbury after Nestlé pulled out of the bidding for the British confectioner, with Kraft saying it intended to use the net proceeds from the $3.7bn sale to sweeten its offer to Cadbury shareholders.
Kraft’s original bid, worth £10.2bn ($16.4bn) or 745 pence per share, was rejected as derisory by Cadbury’s board.
Cadbury this week, in its second defence document, forecast sales growth of up to seven per cent for 2010.
Meanwhile, the UK trade union group, Unite, in a warning to Cadbury investors, said that Kraft’s need to service its colossal debt could put 30,000 Cadbury jobs at risk.
And Unite argues that Kraft's huge product portfolio, stretching from processed cheese to groceries, is not a good fit with Cadbury, and locating it within a disparate portfolio will damage the Cadbury brand.
Jennie Formby, Unite national officer for food and drink, in urging the shareholders to resist Kraft's offer, said that: "Cadbury has clearly demonstrated its strength as a standalone company. Contrast that with Kraft's excessive debt, under-performance and the unacceptable risks this brings for Cadbury and it is hard to see any wisdom in this bid whatsoever.”