The iconic 186-year old UK confectioner Cadbury today finally gave up its struggle to remain independent after the world's second largest food and beverage company Kraft Foods raised its takeover offer to $19.6 billion.

The Northfield, Illinois-based Kraft sweetened its $16.7-billion hostile offer to $19.6 billion by offering 840 pence a share and a special dividend of 10 pence a share to Cadbury shareholders.

Under the new offer, Kraft is offering 500 pence a share in cash plus 0.1874 of a new Kraft share for Cadbury against its September offer of 300 pence in cash and 0.2589 new Kraft shares for every Cadbury share.

Cadbury's board, led by chairman Roger Carr decided to end one of the most acrimonious takeovers in the UK's corporate history after Franklin Templeton, a large US mutual fund holding a 7-per cent stake and Standard Life Investments holding little less than 1 per cent in Cadbury gave their nod for Kraft's higher bid and the prospect of a counter-bid from US-based confectioner Hershey faded.

In a statement to the London Stock Exchange, Carr recommend the revised offer from Kraft to all the company shareholders and said, "We believe the offer represents good value for Cadbury shareholders... and will now work with the Kraft Foods' management to ensure the continued success and growth of the business."

The merger, if approved by the regulators, would create a company with $50 billion in annual sales and make it the world's largest chocolatier, ahead of rival Mars-Wrigley by combining Cadbury's 104-year Dairy Milk Chocolate brand and Trident gum with Kraft's Toblerone, Terry's chocolate brands and Milka.

Cadbury shareholders will now have to wait till 25 January to see if Hershey will be able to muster the necessary funds to offer a higher bid than Kraft-a prospect that looks extremely distant, or until 2 February to decide whether to accept the new offer or said an analyst.
Kraft's new offer values Cadbury shares at 13 times the group's estimated earnings before interest, tax, depreciation and amortization in 2009.

Kraft's chairman and chief executive, Irene Rosenfeld, who has been in London since Monday trying to hammer out an offer that could not be refused by Cadbury shareholders, said, "This recommended offer represents a compelling opportunity for Cadbury shareholders, providing both immediate value, certainty and upside potential in the combined company."

Cadbury chairman Carr, who had been constantly rejecting Kraft's hostile takeover offer since the $16.7-billion bid in September, (See: Cadbury rejects Kraft Foods' $16.7 billion merger offer) finally sat with Rosenfeld late last night to try and break the impasse, which according to many analysts may have cost Rosenfeld her job, had it not been esolved.

Cadbury was opened by John Cadbury in 1824 in Birmingham's Bull Street, in the UK as a store selling tea, coffee, cocoa and drinking chocolate. It was only in 1897 that it began making chocolates.