The news comes days after the UK chocolatier again rejected a hostile 10 billion pound ($16.2 billion) offer from the maker of Oreo cookies and Velveeta, arguing the bid undervalues a company with solid growth prospects.
The deal would create the world's largest confectionary group. Kraft is proposing issuing up to 370 million ordinary shares, raising potentially $10 billion based on a Friday closing price of $27.01. The company has said it will pay as much as 4.3 billion pounds in cash to seal the deal.
Kraft's board unanimously recommends its shareholders vote for the share issuance proposal, the company said in a stock exchange filing.
The shares could be used to buy stock from Cadbury shareholders, to finance the proposed deal, or for any other purposes related to the acquisition, the company added.
Kraft offered on December 4 to buy the Dairy Milk chocolate maker. But Cadbury says rivals Hershey (HSY.N) and Italy's Ferrero were contemplating rival bids.
Kraft's cash-and-stock offer is worth just under 730 pence ($11.85) per share
Kraft has urged shareholders to question whether Cadbury can hit its revenue growth targets, if it can deliver on margin objectives without further spending on restructuring, whether its margin goals are indeed achievable, and what its underlying cash flow is.
Cadbury has responded by saying Kraft seemed to have run out of ideas.
(Reporting by Lisa Baertlein and Dhanya Skariachan; editing by Andre Grenon and Carol Bishopric)