Kraft will not have to offer much more than 800 pence a share for Cadbury, analysts said, after shares in the British confectioner dipped 0.3 percent to 770p while Kraft's cash and shares bid was valued at 771p a share.
Reports of a possible counterbid from Hershey
With Kraft still the sole bidder its chances of winning the game have been boosted in recent days by a rise in its own share price, which has in turn raised the value of its current cash and shares offer.
Kraft raised the cash element of its bid for Cadbury on Tuesday without changing the price by making a corresponding cut in the paper element, but within hours Kraft's largest investor Warren Buffett warned the U.S. group not to overpay and issue a large number of new Kraft shares.
We continue to believe Kraft will have to come up with a bid of over 800p for Cadbury to fold, said Investec Securities analyst Martin Deboo.
Reports that members of the Cadbury board have been talking to Hershey to encourage a rival bid to Kraft's were largely discounted by analysts after Cadbury admitted it was not looking for a white knight rescue bidder.
We are focused on delivering value to our shareholders and unless and until we have a credible offer that adequately reflects the strength of this business, there is nothing to comment upon, Cadbury said in a statement late Wednesday.
A Hershey spokesman declined to comment.
If there is not a counter bidder, then we see Kraft having to sweeten its bid but only up to around 800p, said another industry analyst.
The U.S. food group said on Wednesday it had a 1.52 percent take-up from Cadbury shareholders, but the offer will remain open until February 2 and many Cadbury investors still hope Kraft will improve its bid terms by its deadline of January 19.
Cadbury outlined the timing for the publication of its final defense documents against the Kraft bid on Thursday, saying it will publish new financial information on January 12 such as
forecasts of its 2009 results and outlook for 2010.
The group has also been allowed by the UK Takeover Panel to give more details of its 2009 performance after the UK stock market has closed at 1630 GMT on January 14.
(Editing by Greg Mahlich)