US food group  Kraft was on Friday preparing to launch a hostile takeover bid for Cadbury in its ambition to create a combined global confectionery group.

Kraft was finalising its plans to make a direct appeal to the shareholders of Britain’s best-known chocolate brand by Monday when a “put-up or shut-up” deadline enforced by the Takeover Panel expires, according to people familiar with the situation.

Cadbury was not expecting a last-minute friendly approach from Kraft over the weekend, a person close to the company said. “We didn’t invite this. We fill a well-defined hole in the Kraft structure ... but for us they offer nothing.”

A combined company would rank as the world’s biggest confectionery group, with a market share of nearly 15 per cent. Kraft has a strong presence in Europe, with brands such as Milka and Toblerone, while Cadbury dominates the UK and markets such as Australia, with Crunchie, Flake and Dairy Milk.

A top-10 shareholder in Cadbury said he would not be surprised if Kraft formalised its indicative offer as an initial step. No counter-bidders for Cadbury have yet emerged so Kraft is under no pressure to raise its indicative offer.

But the investor said shareholders would not support a final bid unless it was above £8. “It has to be the high eights to have a chance,” he said.

One banker not advising Kraft or Cadbury said that bidding at existing levels could create “hostile momentum” among investors. “They might feel they are better off bidding at current market price of Cadbury.”

From Financial Times...read full story here.