CADBURY's future hangs in the balance this weekend as Kraft, the American food giant, puts the finishing touches to raising its £10.5 billion bid for the chocolate maker.
The new offer, which is expected to improve Kraft's bid from 771p per share to at least 820p, will test the resolve of Cadbury's loyal shareholders - but many insist they will hold out for a higher price.
A group of 14 hedge-fund managers with shares in Cadbury told Irene Rosenfeld, chief executive of Kraft, last week that they wanted at least 850p a share. The Cadbury board has dismissed the existing Kraft offer as derisory.
Kraft is expected to increase the cash component of its bid to win over investors who don't want Kraft stock. It has until Tuesday to raise its bid, but is expected to do so tomorrow. It will then have until February 2 to secure acceptances from 50% or more of Cadbury's shareholders. Cadbury's big investors have told The Sunday Times that they will not accept a low-ball bid.
Peter Langerman, chief executive of US-based Franklin Mutual Advisers, Cadbury's biggest investor, with a 7.7% stake, said the present offer materially undervalues the group.
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Robert Talbut at Royal London Asset Management said: "The minimum price for a conversation is 850p. But even then we would look to the current board for their view." Andy Brown, chief executive of Cedar Rock Capital, said: "If Kraft thinks that it can win at an undemanding price, it will find that Cadbury has sufficiently loyal shareholders for that not to happen."
It emerged this weekend that Cadbury has given its blessing to Kraft opening talks with the company's independent pension trustees, to discuss its pension deficit.
Hershey, the American confectionery company, is also thought to be edging closer to a bid for Cadbury but the City remains sceptical that it has the firepower to outgun Kraft, which has a market value more than five times its size.