(Bloomberg) – Kraft Foods Inc., the maker of Oreo cookies, began its unsolicited tender offer for Cadbury Plc as the U.K. candy maker traded above the 10.2 billion-pound bid ($17 billion).

Holders of London-based Cadbury have until Jan. 5 to accept the offer, which is the same as a proposal outlined on Sept. 7 and Nov. 9, Kraft said in a statement today. Kraft, based in Northfield, Illinois, is offering 714 pence a share, based on yesterday’s closing stock price.

Cadbury, which has 14 days to file a response arguing against a takeover or seeking a higher price, has called the cash-and-stock offer an “unappealing prospect” from a “low- growth” conglomerate. The U.S. company may still raise its offer to as much as 780 pence a share if Cadbury shareholders balk at tendering their stock, said Alexia Howard, an analyst with Sanford C. Bernstein & Co. in New York.

“It’s going to depend on who blinks first,” Howard said in a telephone interview. “Kraft is going to have to gauge what the acceptance level is and decide.”

A spokesman for Cadbury in the U.S. declined to comment.

Cadbury, which has traded above the offer since it was made, fell 4.5 pence to 795.5 pence at 4:18 p.m. in London trading. Kraft rose 18 cents to $26.60 at 11:18 a.m. in New York Stock Exchange composite trading.

Higher Bid?

Kraft has 46 days to raise its bid if it chooses, according to U.K. takeover law. A competing bid, which would trigger a new timetable, hasn’t emerged. Ferrero SpA and Hershey Co. said in November that they were evaluating options.

Kraft’s offer for Cadbury, the maker of Creme Eggs, represents an enterprise value of 14.2 times the U.K. company’s underlying earnings before interest, taxes, depreciation and amortization, according to the offer document. It would be the biggest cross-border acquisition this year.

The combination “would create a significant growth opportunity for both businesses,” Kraft Chairman and Chief Executive Officer Irene Rosenfeld said today in the statement. “Our offer is fully financed, represents a substantial premium to Cadbury’s unaffected share price and provides both immediate value certainty and meaningful longer-term upside potential.”

Acquisition Financing

The U.S. company said Nov. 9 it will use available resources for the cash portion of the deal, as well as a multi- currency senior bridge loan for as much as 5.5 billion pounds.

The 364-day loan facility will be provided by Banco Bilbao Vizcaya Argentaria SA, Barclays Capital, BNP Paribas SA, Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings Plc, Royal Bank of Scotland Group Plc and Societe Generale SA, Kraft said last month.

The entry of another bidder could force the company to change its approach, Bernstein’s Howard said.

“Ultimately, there’s no counteroffer on the table, no matter what the noise has been, so there’s no reason for Kraft to have raised their offer,” Howard said.

Hershey, the maker of Reese’s Peanut Butter Cups, said in a Nov. 18 regulatory filing it was “reviewing its options.” Ferrero, the Italian maker of Tic Tacs and Nutella spread, said separately it was in “preliminary stages of evaluating its options in respect to Cadbury.”

Nestle Options

Nestle SA is weighing options including a possible bid for Cadbury that would challenge Kraft’s offer, two people with knowledge of the matter said last month.

Spokesmen for Ferrero, Hershey and Hershey’s controlling trust declined to comment. A Nestle spokesman didn’t immediately return a call seeking comment.

Hershey, the largest U.S. chocolate maker, got about 14 percent of its $5.13 billion revenue outside its home market in 2008. Cadbury, the maker of Dairy Milk chocolate, had sales of 5.38 billion pounds last year, all but 22 percent coming from outside North America.

Hershey, based in the Pennsylvania town of the same name, rose 22 cents to $36.12 in New York. Nestle shares advanced 19 centimes to 49.96 francs in Zurich.

Kraft’s offer is worth less now than when the foodmaker first disclosed the initial terms on Sept. 7. The U.S. company formalized its offer of 300 pence in cash and 0.2589 new Kraft share per Cadbury share last month.

The current value of the bid is 26 percent more than Cadbury’s share price on Sept. 4, the last trading day before the initial proposal was made public.

Rosenfeld has said the company will remain “disciplined” in its pursuit of Cadbury and is well-positioned with or without the company.

A deal would push Kraft, the fourth-largest candy and chocolate maker by market share, past Mars Inc. as the world’s largest confectioner, based on data from researcher Euromonitor International. Kraft has said the combined company would have revenue of about $50 billion.

To contact the reporters on this story: Duane D. Stanford in Atlanta at dstanford2@bloomberg.net.

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