Britain's Cadbury Plc raised its long-term growth targets and reported upbeat trading as it dismissed a 10 billion pound ($16.5 billion) bid from Kraft Foods , kicking off a seven-week fight for its independence.
The Dairy Milk chocolate maker on Monday called Kraft's bid wholly inadequate.
Kraft is trying to buy Cadbury on the cheap to provide much needed growth to their unattractive low-growth conglomerate business model, Cadbury Chairman Roger Carr said in a statement. Don't let Kraft steal your company with its derisory offer.
Highlighting the strength of its standalone strategy, Cadbury outlined a higher growth vision for an independent future as a fully focused confectionery group built around strong sales growth and a rise in profit margins.
The group raised its underlying annual sales growth target to between 5 and 7 percent from its previous 4 to 6 percent range and saw operating margins by 2013 in a range of 16 to 18 percent after looking for good mid-teens margin by 2011.
It also looked to double-digit percentage rises in dividend payouts from 2010 onwards, and a higher rate of converting operating profits into cash flow also from 2010.
Kraft's hostile cash and shares offer is currently worth 727 pence, or 10 billion pounds, against Cadbury's closing share price on Friday of 790-1/2p, and most analysts believe Kraft will need to pay 820p to 850p to win.
Kraft has declined to raise its bid from the terms first announced on September 7 with 300p in cash and the rest in new Kraft shares, determined not to overpay and to play the long game, convinced no rival bidder will emerge.
U.S.-based Hershey and Italy's Ferrero have said they are contemplating bidding for Cadbury, while Nestle is said by analysts to be watching events closely. The Sunday Telegraph has reported Cadbury and Hershey have held talks over a friendly bid by the U.S. firm.
(Reporting by David Jones; editing by Paul Hoskins)