Kraft CEO courts Cadbury investors in London

CHICAGO/LONDON (Reuters) - Kraft Foods Inc CEO Irene Rosenfeld was going door-to-door in London on Wednesday, visiting CADBURY (CBRY.LO) shareholders at their offices to win support for Kraft's $17.3 billion takeover bid.

Rosenfeld was finding some of those doors closed, as a number of Cadbury shareholders have declined to meet while Kraft sticks to a hostile offer they believe is too low.

"It is highly possible that we will have some dialogue with Kraft if they come up with a higher offer next week," one top 20 Cadbury investor, who declined to meet with Rosenfeld, said, referring to expectations Kraft would raise its bid by a January 19 deadline.

But the investor did not believe Kraft, or Cadbury, could divulge new information that was not already public.

"Arguably we are still in the phoney war phase now," the investor said. "I think with all the time and money invested so far, Kraft is unlikely to walk away. There is scope to improve the offer."

Kraft has offered cash and stock worth 10.62 billion pounds ($17.27 billion), or 772.4p per Cadbury share. That is nearly 2.2 percent below the level where Cadbury shares traded on Wednesday.

Kraft shares were up 0.7 percent at $29.48, after the maker of Oreo cookies and Velveeta cheese raised its 2009 earnings forecast 3 cents to at least $2 a share.

For a graphic on the Cadbury price premium over Kraft's bid: http://graphics.thomsonreuters.com/0110/EZ_CBRY0110.gif

For Reuters Insider piece on arbitrage activity, please click: http://link.reuters.com/tat23h

As Kraft and Cadbury enter the final stretch of their showdown, other potential suitors have lost interest.

Swiss food giant Nestle said last week it would not enter an auction for the British chocolatier, while Italy's Ferrero has decided not to make an offer, a source familiar with the situation told Reuters on Tuesday.

"Ferrero's withdrawal of its interest clears the field for Kraft, but we still expect Kraft to have to pay over 800p to win Cadbury," one analyst said.

Hershey Co , once seen as a potential partner with Ferrero on a bid for Cadbury, is continuing to work on a solo bid, the Associated Press reported on Wednesday, citing a person familiar with Hershey's plans. Analysts have been skeptical that Hershey could afford a bid on its own.

A Hershey spokesman declined to comment.

Hershey shares were down 2.4 percent at $36.85.

Cadbury investors have until February 2 to respond to Kraft's offer.

CADBURY DEFENDERS RALLY

Meanwhile, Britain's Business Secretary Peter Mandelson was expected to add his weight to union calls for Cadbury shareholders to resist Kraft.

Mandelson called a group of institutional investors to discuss their role in foreign takeovers of British businesses on Thursday, and Kraft's offer for Cadbury was expected to be at the top of his agenda.

Mandelson will lead a team of British members of Parliament in the talks while the institutional investors will be led by Keith Skeoch, chief executive of Standard Life Investments, one of Cadbury's biggest investors.

The Unite trade union warned of massive job cuts and "unacceptable risks" if Kraft succeeds in its bid.

Britain's biggest trade union said nearly 30,000 jobs were at risk if the debt-laden Kraft wins, and urged Cadbury investors to put the wider public interest ahead of price.

A Kraft spokeswoman said the assertions of potential massive layoffs were "utterly unfounded." ($1.63-1 GBP) (Additional reporting by David Jones in London and Martinne Geller in New York; Editing by Michele Gershberg, Maureen Bavdek and John Wallace)

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