Cadbury is on Tuesday expected to announce a healthy increase in its 2009 dividend, and robust sales and profits, as part of its final defence arguments against Kraft’s £10.5bn hostile takeover bid.

The confectioner will provide key financial data from 2009 as it tries to convince investors that it is better off remaining independent than being acquired by Kraft.

Cadbury in December released a new set of financial targets in the first stage of its defence against the US food group. These included achieving revenue growth of between 5 and 7 per cent a year; making operating margins of between 16-18 per cent by 2013; achieving operating cash conversion – the amount of operating profit that will be converted into operating cash flow – of 80-90 per cent from 2010. Cadbury’s track record on cash conversion is about 50 per cent.

Cadbury also said it would target dividend growth of a double-digit percentage. The dividend announcement is expected to be in line with that target. In 2008 Cadbury recommended a full-year dividend of 16.4p per share, up 6 per cent on 2007. The announcement is not expected to include new financial targets.

Kraft, which last week increased the cash component of its proposed cash-and-stock offer from 300p to 360p, is understood to be thinking of adding more cash to woo Cadbury shareholders. It believes that if it makes an offer valuing Cadbury at more than 800p, the UK confectioner’s board will need to consider the bid seriously.

Irene Rosenfeld, Kraft chief executive, is in London this week to meet Cadbury investors to discuss the bid. Big investors are said to be happy to meet her. Only a couple of the smaller holders have said they would prefer to wait until Kraft talked about a higher price.

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