Nov. 7 (Bloomberg) -- Franklin Resources Inc. fund manager Anne Gudefin, whose company is the biggest investor in Cadbury Plc, said she targeted the U.K. confectioner as a takeover candidate before Kraft Foods Inc.’s unsolicited approach.

“We have an idea” of a bid price for Cadbury that would be acceptable, Gudefin said, with regard to her $15.1 billion Mutual Global Discovery Fund, which held 19.7 million Cadbury shares as of Sept. 30, according to Bloomberg data. “We’ll just wait until we have something on the table. If it comes and if we feel that it’s going to be appropriate, we will comment on it.” Franklin Resources has other funds that also own Cadbury stock.

Kraft has a Nov. 9 deadline to make a formal bid for Cadbury, which has rejected its initial cash-and-stock approach, now worth 9.8 billion pounds ($16 billion). According to a filing yesterday, Franklin holds more than 111 million Cadbury shares across its funds, or 8.1 percent of the equity.

Gudefin spoke in an interview at a Franklin Templeton Investments conference in Vienna Nov. 5, commenting on her fund, rather than speaking for all of Franklin. She declined to comment further on Kraft. Her fund beat 99 percent of its peers during the past five years, according to Bloomberg data.

“Cadbury is a company that nobody liked a year ago,” when her fund bought “quite a lot” at around 525 pence and 550 pence per share, she said. Cadbury closed yesterday at 758 pence.

Increased Stake

Franklin funds kept lifting their stake after Kraft disclosed its bid on Sept. 7. Before then, filings showed Franklin held 5.6 percent of Cadbury. On Oct. 7, Franklin bought 4.4 million Cadbury shares for about 35 million pounds, or 795 pence per share, boosting its stake to 7.2 percent.

Since that disclosure, Franklin has bought even more Cadbury stock. Franklin’s filings haven’t disclosed which individual funds or managers have made purchases, and Gudefin declined to discuss them.

Kraft, the Northfield, Illinois-based maker of Philadelphia cream cheese, is the world’s second-largest food company. It wants to buy Cadbury to bulk up in emerging markets including India, Brazil and Mexico and tap the fast-growing gum business.

“We knew at some stage there would be consolidation in the industry,” said Gudefin, who is based in London.

Shares Fall, Deal Doubt

Cadbury shares fell 0.5 percent yesterday to 758 pence, the fourth straight drop, their lowest since Kraft’s bid was disclosed. Kraft’s offer is currently worth about 720 pence.

The stock has drifted lower for two weeks as counter- bidders failed to emerge and doubts grew that Kraft would bid 850 pence or more to ensure a successful takeover. A month ago, some analysts were predicting Cadbury could sell for 900 pence a share and bids from Nestle SA or Hershey Co. were possible.

Kraft Chief Executive Officer Irene Rosenfeld said this week that she would stay “disciplined” on Cadbury and not risk her company’s dividend.

Martin Deboo, an analyst at Investec, cut his price target for Cadbury shares to 780 pence on Nov. 4, saying he expects Kraft to bid just 800 pence a share and expects the probability of a successful bid to “fall accordingly.” Pablo Zuanic of JPMorgan Chase & Co. wrote this week that he had a “growing belief” Kraft might walk away.

Kraft Loan

Kraft is weighing whether or not to increase its bid, the Financial Times reported today, citing people it didn’t identify. The FT also cited one of Cadbury’s ten biggest shareholders as saying it was against a bid below 800 pence, and Kraft’s offer would have to be nearer to 900 pence to succeed. That shareholder’s identity also wasn’t disclosed.

Whether a bid comes or not, Kraft has moved to secure the needed financing.

The company plans to borrow about $9 billion from nine lenders led by Citigroup Inc. and Deutsche Bank AG to finance a bid, according to two people familiar with the matter. The pound-denominated loans would be refinanced partly from the sale of bonds after a takeover is completed, the people said, declining to be identified because the talks are private.

A spokeswoman for Kraft, who declined to be identified citing company policy, wouldn’t comment on the loan. Maria Darby-Walker, a spokeswoman for Cadbury in Uxbridge, England, also declined to comment on the financing.

Banco Bilbao Vizcaya Argentaria SA, Barclays Capital, BNP Paribas SA, Credit Suisse Group AG, HSBC Holdings Plc, Royal Bank of Scotland Group Plc and Societe Generale SA are also lined up to provide financing, the people said. Citigroup spokeswoman Jeanette Volpi in New York and London-based Deutsche Bank spokeswoman Libby Young declined to comment on the financing, as did spokesmen for the other seven banks.

To contact the reporters on this story: Michael Patterson in Vienna at mpatterson10@bloomberg.net; Keith Campbell in London at k.campbell@bloomberg.net.

Last Updated: November 7, 2009 12:23 EST