Kraft is the most logical buyer for British chocolate firm Cadbury , but the U.S. rival will remain financially disciplined, one of the company's executives said on Tuesday.

The simple fact is that Cadbury is worth what someone is willing to pay for it - nothing more, said Michael Osanloo, Executive Vice President, Strategy, Kraft Foods in a regulatory statement issued by the company following a media interview.

Cadbury rejected Kraft's 10.2 billion pound ($16.7 billion) offer for the world's No. 2 confectionery group, and speculation is swirling about whether the American rival will raise its offer.

The storied chocolate firm is seen as either attracting a higher bid with more cash from Kraft, or a possible counterbid, analysts say, but some think it unlikely that Cadbury will be able to extract a much higher price.

We expect Cadbury's management to mount an aggressive defense, but confess to seeing few options on the table as a standalone company that would get the share price to 745p, let alone if there were a higher offer, said Warren Ackerman at Evolution Securities.

There is, however, the chance of counterbidders, and the names seen most likely are U.S. firm Hershey Co and Switzerland's Nestle AG . Some analysts say they could make a joint offer for Cadbury and then split the business to get around anti-trust problems in chocolate.

Hershey is being advised by U.S. bank JPMorgan on a possible strategy regarding Cadbury, a source familiar with the situation told Reuters on Tuesday, which indicates it could be considering a run for the chocolate maker.

Under a joint-bid scenario, Nestle is seen as taking Cadbury's gums and Hershey the chocolate. For Hershey, an acquisition would also expand the U.S.-focused company internationally.

Hershey and JPMorgan declined comment.

Nestle Chief Executive Paul Bulcke said on Monday he was open to opportunities if they fit strategically, but reiterated the group did not plan any big acquisitions in 2009 or 2010.

His comments were seen as making it less likely Nestle will bid. Kepler analyst Jon Cox said he did not believe a bidding war will emerge, given that Nestle, which is pretty much the only company with the financial resources to make a bid, has signaled it is not interested.


Kraft's bid was seen by analysts as an opening low shot in a bidding battle, and Cadbury's shareholders will not be keen on 60 percent of the price, or around $10 billion, coming in the form of Kraft's U.S.-listed shares, analysts said, adding that investors would prefer more cash.

We think Kraft is underbidding the potential synergies and see the high Kraft equity component to the consideration as a deterrent for Cadbury shareholders, said Martin Deboo at Investec Securities.

Kraft launched its bid on Monday at 300p cash and 0.2589 new Kraft shares per Cadbury share, valuing the British group at 745p at Kraft's Friday closing share price, with the U.S. group seeing annual deal cost savings of $625 million.

Cadbury shares closed up 0.4 percent at 786p on Tuesday after a hefty rise of 38 percent on Monday when they touched 808p. Kraft shares were 5 percent lower at $26.69.

Kraft is looking at a Cadbury deal to become the world's biggest confectionery group, tapping into Cadbury's big emerging market exposure, and boosting the U.S. group's overall growth rate in a deal which should encounter few anti-trust problems.

The move would catapult Kraft to global No. 1 in confectionery with a 14.8 percent share ahead of Mars-Wrigley's 14.6 percent as it would join together Kraft's No. 5 position with a 4.7 percent share and Cadbury's No. 2 global position.

(Reporting by David Jones and Megan Davies; editing by Sitaraman Shankar and David Cowell)