KRAFT Foods is planning to improve its £10.1bn hostile takeover bid for Britain’s Cadbury using cash from the sale of its frozen pizza business.
The US company has sealed a $3.7bn (£2.3bn) deal with Nestlé and will use the money to offer Cadbury’s shareholders an enhanced offer.
It will not up the total sum on offer but will give cash alternatives to some of the shares up for grabs.
Nestlé has now ruled itself out of the race for the chocolate maker.
Kraft said that it was providing the extra cash "because of the desire expressed by some Cadbury Securityholders to have a greater proportion of the offer in cash and because Kraft Foods shareholders have expressed a desire for Kraft Foods to be more sparing in its use of undervalued Kraft Foods shares as currency for the offer".
It added: “Kraft Foods continues to believe that its share price is depressed as a consequence of a number of short-term factors which it believes will dissipate once the uncertainty surrounding its offer for Cadbury is resolved.”
The company has also extended the deadline for acceptances to its takeover bid to 2 February.
Meanwhile Kraft said it would release the full details of its improved offer by 19 January.
Nestlé, which has also agreed to sell its remaining stake Swiss eyecare company Alcon, to Novartis for about $40 billion, issued a statement after discussions with the UK Takeover Panel.
It said: “Nestlé confirms that it does not intend to make, or participate in, a formal offer for Cadbury.”