Cadbury brands include Creme Egg, Dairy Milk, Flake and Wispa.

The Board of Cadbury has surprised the nation by approving a takeover of the iconic British food company by Kraft Foods.

With an increased valuation of the company at £11.5 billion, shareholders have been advised by the Board to accept the new offer of 840 pence per share. Cadbury shareholders will also be entitled to receive 10 pence per share by way of a special dividend following complete approval of the offer.

US headquartered Kraft Foods made a hostile offer of £10.2bn for Cadbury in September, but that was emphatically rejected. The Birmingham-based chocolatier then received approaches from Hershey, and others were mooted from the likes of Nestlé and Ferrero.

But Kraft was formidable in its fight for Cadbury.

The news that the Board is now happy to accept a takeover by Kraft has come as a real surprise considering it was only last week that it published a list of reasons why an offer from Kraft should be rejected. It cited a strong 2009 financial performance and a strong business momentum going into 2010.

Irene Rosenfeld, Chairman and CEO of Kraft Foods, said that the company has great respect for Cadbury’s brands, heritage and people, but said the offer was too good an opportunity for shareholders of either company to refuse.

“We believe they [Cadbury] will thrive as part of Kraft Foods.”

Despite his earlier reservations Chairman of Cadbury, Roger Carr, agreed: “We believe the offer represents good value for Cadbury shareholders and are pleased with the commitment that Kraft Foods has made to our heritage, values and people throughout the world.

“We will now work with the Kraft Foods’ management to ensure the continued success and growth of the business for the benefit of our customers, consumers and employees.”

Unite the Union launched a ‘We love Cadbury’ campaign in support of keeping the company independent. It claimed that a takeover by a “debt-ridden” Kraft could put more than 7,000 Cadbury jobs at risk.

Jennie Formby, Unite National Officer for Food and Drink, said: “Cadbury has clearly demonstrated its strength as a standalone company. Contrast that with Kraft’s excessive debt, underperformance and the unacceptable risks this brings for Cadbury and it is hard to see any wisdom in this bid whatsoever.”

The media and general public will now wait with baited breath to see how the takeover pans out and what the repercussions of the offer will mean for Cadbury’s 6,000 UK staff.