THE 186-YEAR-OLD British confectionery group Cadbury yesterday accepted an improved £11.6 billion (€13.3 billion) takeover bid from Kraft Foods.

The British conglomerate justified its decision to sell out to the US food group as the price of globalisation. “The reality is we are part of a global business,” Cadbury chairman Roger Carr said after recommending that shareholders accept the higher Kraft offer, valuing Cadbury at 850p per share.

Irene Rosenfeld, Kraft’s chief executive, secured the Cadbury board’s recommendation after a fierce, five-month takeover battle. With a deadline looming to raise its bid, Ms Rosenfeld held talks late into Monday night in London with Mr Carr and Cadbury chief executive Todd Stitzer.

“We are quite confident that the combination of these two companies will help us to build on that momentum and further accelerate our ability to deliver attractive returns,” said Ms Rosenfeld.

The deal will create the world’s largest confectioner, displacing privately held Mars. The takeover creates a company with about $50 billion (€35 billion) in annual sales.

Cadbury investors will get 840p a share, including 500p in cash and the rest in stock, Kraft said. Cadbury will also pay its holders an additional 10p dividend once the offer is unconditional.

The revised bid is about 9 per cent higher than Kraft’s previous bid of 769p, and consists of 40 per cent stock and 60 per cent cash.

Kraft said the purchase will result in at least $675 million in annual cost savings, $50 million more than it previously estimated, and give the company leading positions in emerging markets including India, Brazil and Mexico. The purchase should close in mid-February, Kraft said.

Cadbury has agreed to pay a break-up fee of £117.7 million if it withdraws the recommendation.

Trade union Unite has opposed the takeover, saying the US company would need to lay off tens of thousands of workers to achieve its savings targets in a deal.

The company employs almost 7,000 workers in Britain and Ireland. It has had manufacturing operations in Ireland for more than 75 years, with more than 900 workers at plants in Coolock in Dublin, and Rathmore in Kerry.

The Irish branch of the union said the sale of Cadbury to Kraft is a “very sad day” for Irish manufacturing and the company.

“Whatever good intentions Kraft may have towards Cadbury’s workforce, the sad truth is there will be an irresistible imperative to pay down their debt, and this raises real fears for jobs and investment in this country,” said Jimmy Whelan, European co-ordinator for Unite members in Cadbury.

The British confectioner was founded in 1824 by the Cadbury family, social reformist Quakers, who provided workers with accommodation and education in addition to employment. – Copyright The Financial Times Limited 2010/ Additional reporting Bloomberg, Reuters