Cadbury and Kraft

Kraft Foods has offered to buy the famous confectioner Cadbury PLC in a part cash, part stock swap deal valued at $16.73 billion (which is 10.13 billion GBP).

Cadbury's management has rejected the offer, saying that it "fundamentally undervalues" the company -- which strikes me as an odd thing to say, since the offer is at a 31% premium on the closing share price of Cadbury Friday.

Trian Fund Management, a hedge fund manager controlled by Nelson Peltz, owns 3.5% of Cadbury, a stake Peltz accumulated back in 2007, and Trian has played a big role -- bigger than the size of that stake would indicate -- in Cadbury's management decisions before, notably in pressing for the spin-off of the Dr. Pepper softdrinks business.

Trian also, intriguingly, owns a stake in the suitor company in this scenario, Kraft. There, too, it has played an activist role, getting two Peltz-approved independent directors on the Kraft board in November 2007.

My guess, then, is that we will be hearing from Peltz if this turns into a protracted struggle for control of the chocolatier.