Kraft Foods, the largest food and beverage company in the US and the second largest in the world after Nestlé, today said that the UK confectioner Cadbury has rejected its $16.7-billion (£10.2 billion) acquisition offer to create ''a global powerhouse in snacks, confectionery and quick meals.''

Northfield, Illinois-based Kraft said in a regulatory filing today that it has offered to pay 300 pence in cash and 0.2589 new Kraft shares for every Cadbury share, valuing the London-based company at £10.2 billion.

The offer valued each Cadbury share at 745 pence, a premium of 31 per cent over its closing Friday share price of 568 pence but the board of Cadbury has rejected the offer, Kraft said.

Kraft, the maker of the popular Kraft and Dairylea cheese and Toblerone chocolate among other products, said that it was going public with Cadbury's rejection to "help maintain a constructive dialogue with Cadbury," as it is committed towards working on a successful completion of the deal.

Kraft said that the combination would build on Kraft Foods' position as a global powerhouse in snacks, confectionery and quick meals with a rich portfolio of iconic brands.

The merger would bring in annual savings of $625 million through distribution, marketing and product development costs, Kraft said.

Kraft, with 2008 revenue of over $42 billion, said that the acquisition would benefit the UK in terms of jobs, as it would operate the Cadbury's Somerdale plant, which has been earmarked for closure.

Irene Rosenfeld, chairman and chief executive of Kraft Foods said that the merger proposal is about growth and Kraft would like to build upon Cadbury's iconic brands and strong British heritage through increased investment and innovation.

Cadbury, the maker of Cadbury chocolate and Trident gums had raised it profit forecast for the current year in July after initiating cost cuts and raising prices of its popular chocolates.

Last December, Cadburys exited from the beverage business after it sold its Australian drinks business of Schweppes to Asahi Breweries for £550 million ($808 million). (See: Cadbury sells Australian drinks business for $808 million)