UK confectioner Cadbury has informed Kraft of their decision to knock back a surprise takeover offer from the US-based manufacturer.

The world’s second largest manufacturer and owner of the Vegemite brand said that Cadbury has rejected an offer worth around A$20 billion that would have created a “global powerhouse in snacks, confectionery and quick meals”. They still hope to pursue the deal, however.

“Kraft Foods today announces that it has made a proposal to the Board of Cadbury to combine the two companies,” Kraft said in a statement. “The Board of Cadbury has rejected this proposal. Kraft Foods is committed to working toward a recommended transaction and to maintaining a constructive dialogue and is announcing this proposal as a means to encourage and further that process.”

The current offer proposed by Kraft represents a 34% increase on Cadbury’s 90-day average share price and would see the creation of a global giant with around US$50 billion in revenue.

Commenting on the proposed transaction, Irene Rosenfeld, Chairman and CEO of Kraft Foods, said that the proposed combination was “about growth”.

“We are eager to build upon Cadbury’s iconic brands and strong British heritage through increased investment and innovation,” she said. “We have great respect and admiration for Cadbury, its employees, its leadership and its proud heritage. As we have done, Cadbury has built wonderful brands by focusing on quality, innovation and marketing, but we believe the next stage in Cadbury’s development will be challenging, given the increased importance of scale in the industry.”

“Cadbury’s brands, which are highly complementary to our portfolio, would benefit from Kraft Foods’ global scope and scale and array of proprietary technologies and processes.”

Ms Rosenfeld concluded that the company hoped to engage in a reasoned discussion of the merits of the deal with the Cadbury Board in the near future.

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