Kraft may sell at least $4 billion of notes due in 3.25, 6, 10 and 30 years, said a person familiar with the offering who declined to be identified because terms aren't set. The Northfield, Illinois-based company won the approval of Cadbury’s shareholders for the 11.7 billion pound ($18.6 billion) acquisition on Feb. 2.

Kraft is marketing its debt as yields on investment-grade corporate bonds rose to 4.623 percent on average yesterday, the highest level since Jan. 13. Investors concerned about the strength of the U.S. economy may favor the foodmaker's debt because its businesses aren't highly susceptible to recession, said William Larkin, who helps manage $500 million at Cabot Money Management in Salem, Massachusetts.

"The food business is less economically sensitive, so it's the perfect play in this kind of marketplace," Larkin said. "Could banks have another leg down? It's possible, if unlikely. Will Kraft be around in 10 years? It's very likely."

Hershey Co. abandoned a plan to bid for Cadbury Plc after the U.K. confectioner accepted Kraft Foods Inc.'s 11.9 billion-pound ($19.2 billion) offer.

Hershey doesn't intend to make an offer, the company, based in the Pennsylvania town of the same name, said in a statement today. The decision not to consider an offer was made at a Jan. 20 board meeting, according to people familiar with the matter.

Kraft said Jan. 19 that its cash-and-stock offer for Cadbury won the U.K. candy company’s approval, after Hershey's board had spent months debating whether to bid and on what terms. U.K. takeover regulators gave Hershey until Jan. 25 to announce a bid or back out.

"It was always going to be a long shot for Hershey to get all their ducks in a row for a bid, and even if they put one together, they were up against a much larger suitor in Kraft," B. Craig Hutson, a corporate bond analyst for Gimme Credit in Chicago, said yesterday.

Hershey has been in talks with credit-ratings companies in recent days about how to structure a bid without imperiling its investment-grade debt rating, said the people, who declined to be identified because the talks are private. It’s also been drafting commitment letters with its lenders, JPMorgan Chase & Co. and Bank of America Corp., to secure a multi-billion-dollar loan package, the people said.

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"This is an awful big prize," Jack Russo, an analyst with Edward Jones & Co. in St. Louis, said in an interview. The benefit of buying Cadbury "just depends on how they structure the deal. This is a chance for them to boost their presence internationally." Russo recommends holding Hershey stock.

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Kraft has until Jan. 19 under U.K. law to raise its offer, and Hershey may conclude that a higher Kraft bid puts the maker of Dairy Milk chocolate and Creme Eggs out of its reach, the people said. Hershey will have another four days, until Jan. 23, to decide whether to enter the fray. In addition to financing the bid through loans and new Hershey shares, the company is also trying to raise cash by selling equity stakes to new investors, the people said.

Buffett's Berkshire Hathaway Inc., Kraft's biggest shareholder, urged fellow investors to oppose a plan to issue as many as 370 million shares to help buy the U.K.-based candy maker. Kraft Chief Executive Officer Irene Rosenfeld is seeking a "blank check" for the deal, Berkshire said yesterday.

"I think Buffett's got it nailed," said Donald Yacktman, founder of Yacktman Asset Management Co., which holds Kraft shares. "Kraft is hemmed in -- there's only so much they’re going to be able to do to make this acquisition." Buffett, who has said shareholders must act like owners, urged caution in negotiations after Cadbury rejected Kraft’s bid of 10.6 billion pounds ($17 billion). In publicly asking others to join him, the 79-year-old Berkshire chairman is drawing on his power as a 9.4 percent owner of Kraft and his standing in financial markets as the world’s preeminent investor.

Berkshire said it may support a Cadbury takeover if it concludes this month that the final offer "does not destroy value for Kraft shareholders." Buffett's assistant, Carrie Kizer, said the company had no comment. "If he says no, everybody else is going to pile on and say no too," said Justin Fuller, a partner at Midway Capital Research & Management who runs the buffettologist.com Web site.

Susan Dougherty, the investor, yesterday asked a federal judge in Newark, New Jersey, to order the board to fulfill its duties to the company and shareholders by engaging in good-faith negotiations with Kraft. Cadbury is fighting a 10.4 billion- pound ($16.8 billion) hostile bid from Kraft.

"Rather than negotiate with Kraft in good faith in order to maximize value in a possible going-private transaction, the board has breached its fiduciary duty by spurning Kraft's offer to acquire the company for a significant premium," according to Dougherty's amended complaint. "Cadbury's purported justification for such conduct is untenable."

Cadbury Plc Chief Executive Officer Todd Stitzer told investors in New York last week that Hershey Co. could expect higher earnings per share if it bought Cadbury, while a Kraft deal may present more cost-cutting opportunities, according to people who heard him. Hershey and Ferrero SpA have said they are reviewing options for Cadbury. Neither has made an offer.

Callebaut has "regularly" received phone calls about the unit, which sells Alprose chocolate bars, Steinemann said in an interview before the company's annual general meeting yesterday in Zurich. He said the company isn't in discussions with the parties, whom he declined to identify.

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The Zurich-based company canceled plans to merge the maker of Sarotti cocoa drinks with Spain's Natra SA in September after failing to agree on a price. Barry Callebaut failed to divest the business as global chocolate consumption declined for the first time in a decade. The unit, which has annual sales of 811 million francs ($791 million), is worth 250 million francs, according to an estimate by Kepler Capital Markets, and about 400 million francs according to Bank Vontobel. Steinemann declined to comment on whether Kraft Food Inc.’s bid for Cadbury Plc will help Barry Callebaut achieve a better price.

Chocolate makers in the U.K. sold 28 million pounds ($46 million) of Fairtrade chocolate in the U.K. last year. The share of Fairtrade in that market will rise to 10 percent in 2010 because of Nestle and Cadbury's changes from 1 percent in 2008, said Eileen Maybin, a spokeswoman for Fairtrade in the U.K. The Fairtrade designation requires chocolate makers pay an extra $150 per ton of cocoa and guarantee a minimum price of $1,600 a ton, she said. The extra money is used for development projects.

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Nestle plans to provide 12 million stronger, more productive cocoa trees to farmers over the next decade. The company has said it will spend 460 million Swiss francs ($456 million) on cocoa, coffee science and "sustainability" projects over the next decade.

Hershey, which has owned the license for the Cadbury brand in the US since 1988, is contemplating a bid for Cadbury after the decision by Kraft of the US this month to go hostile. If Hershey can finance the bid, it is likely to make a friendly offer. Mr Stitzer told the Financial Times that the ethical values of the Cadbury brand -- founded by Quakers who marketed tea, coffee and cocoa drinks as alternatives to alcohol -- were similar to those of Hershey.

Milton Hershey, the US company's founder, was inspired by Cadbury's Bournville village in building his Pennsylvanian company town, Hershey. "Both companies were founded by men of principle and vision who created company towns and supported charitable causes . . . There is quite a lot of cultural similarity," Mr Stitzer said on Friday. "I would prefer Cadbury to be in an environment where its values and principles could continue."

Mr Stitzer suggested that Cadbury's values, which he said included Fairtrade certification for some of its chocolate brands, could be lost if it were bought by Kraft, which is better known for processed cheese, instant coffee and bacon.

Kraft, led by Chief Executive Officer Irene Rosenfeld, made an unsolicited 10.3 billion-pound ($17 billion) approach for Cadbury two months ago. The world's second-largest food company may increase that offer if rival bidders emerge, Reuters said late yesterday, citing a person it didn't identify.

Hershey's controlling trust wants the company to make a $17 billion offer, the Wall Street Journal reported Nov. 20. Nestle is reviewing its options with bankers and may decide against a bid, said two people with knowledge of the matter, who asked not to be identified because the talks are private.

"Every confectionery company of any decent size is going to be looking at this because it's a one-off opportunity," said James Amoroso, a food industry consultant in Walchwil, Switzerland. "They'd be stupid not to examine it."

It is now urging Hershey's chief executive, David West, to make a competing offer to the $16.5 billion bid Kraft made earlier this month for Cadbury, people familiar with the matter say. A bid, if one emerges, wouldn't be ready for at least two weeks, and the potential terms remain in flux.

One possible scenario, said these people, would include at least $10 billion in cash from Hershey, plus $2 billion in new Hershey shares. A third component of this package would be an additional $3 billion to $5 billion in cash from rich investors in exchange for equity in Hershey, these people said. The investors are being courted by Hershey adviser Byron Trott, a former Goldman Sachs banker known for his close relationships with Warren Buffett and other rich investors.

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Mr. Hershey was considered as much a philanthropist as an entrepreneur. He held the view that businesses and their leaders were morally obligated to share their wealth with society. So as he built the chocolate company he raised a town as well -- erecting a bank, a department store, churches, golf courses, a zoo and a trolley system.

In 1909, he and his wife, Catherine, founded a school for orphan boys, now called the Milton Hershey School. He later transferred his wealth, including his company ownership, to Hershey Trust Co., which administers the school's trust.

On Nov. 9 the maker of Oreos and Ritz crackers bid 300 pence in cash and 0.2589 of new Kraft shares for each share of Cadbury. The interest on the loan being provided by nine lenders will be pegged to the London interbank offered rate, said the bankers, who declined to be identified because the negotiations are private. Richard Jacques, a London-based external spokesman for Northfield, Illinois-based Kraft declined to comment.

The range of potential interest margins includes possible increases should the borrower be downgraded, the bankers said. Kraft is rated A- by Standard & Poor's, the fourth-lowest investment grade, while Moody's Investors Service ranks it two levels lower at Baa2.

Cadbury dropped for a sixth straight day to 772.5 pence at 9 a.m. in London trading today. The difference between Kraft's offer, valuing the maker of Trident gum at about 726 pence a share, and Cadbury's stock price has narrowed by 44 percent from a Sept. 15 peak in the spread. Investors are less confident about a competing bid from companies such as Nestle SA or Hershey Co.

"We haven't heard anything from the other rumored protagonists," said William Hobbs, who helps manage 134 billion pounds ($220 billion) in assets, including Cadbury shares, at Barclays Wealth in London. "It would be very surprising if Kraft went for a knock-out bid when they come back if they’re not feeling any pressure from Nestle or Hershey."

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Kraft, based in Northfield, Illinois, has less than two weeks to come back with a formal offer for Cadbury after proposing a cash-and-stock takeover on Aug. 28, valued at 9.92 billion pounds based on yesterday's closing stock prices. A purchase would add Cadbury's Dairy Milk chocolate to Kraft products including Oreo cookies and Philadelphia cream cheese.

Kraft's sales reached more than 24 billion rubles ($815 million) last year in Russia, where it has about 20 percent of the biscuit market. Kraft inherited Bolshevik, Russia’s biggest cookie baker, two years ago with the purchase of Groupe Danone SA's cookie and cracker unit. The acquisition made Kraft the world leader in biscuits. The combination of Kraft and the Danone unit has exceeded growth targets, helped by Oreo cookie sales, which grew 30 percent outside the U.S. last year, said Sanjay Khosla, president of Kraft International.

The acquisition "gave us scale, it strengthened our expertise in biscuits worldwide, it brought in talent and helped our distribution in developing markets," Khosla, 57, said in a telephone interview. Kraft now aims to create a "global powerhouse" in snacks and confectionery with its $16 billion offer for Cadbury Plc. The Northfield, Illinois-based company has three weeks to make a formal offer for Cadbury, which rebuffed its initial approach.

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Bolshevik, which makes butter cookies, wafers and crackers, was founded in central Moscow in 1855 by a French company to produce cookies and cakes. Its name was changed to the Bolshevik Biscuit Factory in 1924 to honor workers who took part in the revolutionary movement, according to the unit's Web site. "When you have an established brand with a strong heritage, it doesn’t make sense to rebrand," Claire Regan, a Kraft spokeswoman, said in an e-mail about the Bolshevik name.

Kraft said that the purchase of the maker of Dairy Milk would protect jobs in the UK - including saving a factory earmarked for closure.

The board of Cadbury has rejected the approach, Kraft said.

Kraft said it wanted to build on Cadbury's brands and that a deal would create "a global powerhouse in snacks, confectionary and quick meals."