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* Cadbury calls Kraft's bid even more unattractive
* Mandelson urges investors to take long-term view
* Doubts raised on how Hershey can fund a rival deal
* Cadbury shares close 1.2 percent up at 796 pence
(Releads with Cadbury comments, investor, share price)
By David Jones
LONDON, Jan 14 (Reuters) - Cadbury (CBRY.L) fired the finalsalvo in its defence on Thursday, branding Kraft Foods' (KFT.N)bid as more unattractive than a month ago, as Cadbury sharesrose on hopes of a rival bid from Hershey (HSY.N).
But as Cadbury's Chairman Roger Carr attacked Kraft's bidand its past performance, analysts remained doubtful over howthe much-smaller Hershey could finance an offer for Cadbury andtop Kraft's 10.5 billion pound ($17.1 billion) hostile bid.
"Kraft's offer is even more unattractive today than it waswhen Kraft made its formal offer in December," Carr said in afinal defence leaving Kraft five days to sweeten its offer.
Because the bid is over half in Kraft's shares, it exposedshareholders to Kraft's history of missed targets compared withCadbury's robust results and excellent momentum into 2010, whilethe deal undervalued Cadbury compared with recent deals, headded.
This came after Britain's Business Secretary Peter Mandelsonmet with fund managers to urge them to take a more long-termview in takeover bids, and as Kraft's CEO Irene Rosenfeld wentfrom door to door to woo Cadbury shareholders in London.
Hershey is still working on a Cadbury bid to top Kraft'soffer according to a source familiar with the matter onWednesday, while the Financial Times said Hershey had authoriseddrawing up a bid for Cadbury and making an offer within weeks.[ID:nN13171025]
But analysts said a solo Hershey bid could be extremelychallenging as Hershey is only half the size of Cadbury and abig share issue would dilute the controlling Hershey Trust,while Kraft still has the option to sweeten its current bid.
"We view a solo Hershey bid as a probability of 15 percent.We estimate a two-third probability of Kraft winning," saidanalyst Simon Marshall-Lockyer at Jefferies International, withthe other probability being Cadbury remaining independent.
Other analysts pointed out that under the current timetable,Hershey only has nine days to come up with a formal offer whichcould prove tight if it is looking for partners to finance thebid and find buyers for parts of the Cadbury's business.
The FT report said Hershey was discussing a plan toauthorise banker Byron Trott to bring private equity investorsinto the deal. Trott is a favourite adviser of Warren Buffett,whose Berkshire Hathaway (BRKa.N) is Kraft's top shareholder.
Marshall-Lockyer believes Hershey would likely have to sellits KitKat franchise in the United States back to Nestle(NESN.VX) for around $1.6 billion and then sell Cadbury'sTrident gum business for $12.9 billion to leave Hershey withCadbury's chocolate and candy businesses.
Cadbury has been defending itself for over four monthsagainst Kraft's bid worth 762 pence against Cadbury shares whichclosed 1.2 percent higher at 796p on Thursday, while analystsand investors say that Kraft needs to offer 800p or above tosucceed.
Under UK takeover rules, Kraft has until Jan. 19 to sweetenits bid, while Hershey has until Jan. 23 to declare its hand andCadbury shareholders until Feb. 2 to decide on the Kraft bid.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^For a graphic comparing Cadbury, Kraft and Hershey:hereFor a BREAKINGVIEWS column, click on [ID:nLDE60D0M2]
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Analyst Jeremy Batstone-Carr at Charles Stanley says anyHershey approach would have to be in cash and shares and involvea rights issue to leave the Hershey Trust without control. Evenwith selling off KitKat in the US and Cadbury's gum, Hersheywould still struggle to mount a stand alone bid, he added.
"We view the likelihood of its success as low, particularlygiven our strongly held belief that Kraft will raise its offer,"Batstone-Carr said.
Meanwhile, Britain's Mandelson was urging big investors totake a longer-term view and not ignore local and workforceinterests in takeover situations. [ID:nLDE60D0DA]
"I ask Cadbury shareholders to take a longer view ofshareholder value. I'm not in a position to block takeovers butI do have an obligation to raise and ask questions," he said.
While Kraft's Rosenfeld struggled to convince Cadburyshareholders of her case according to one top stockholder.
"Kraft didn't have much to say. In fact, I thought it was abit of a waste of time really. They seemed to be saying we arehere now and you will hear from us at a later stage. They talkedabout strategy, but there was nothing beyond that".($1=.6139 Pound)(Additional reporting by Victoria Howley and Raji Menon)(Reporting by David Jones; Editing by Jon Loades-Carter)
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