Hedge funds are looking for Kraft Foods Inc. (KFT) to offer at least GBP11.7 billion for Cadbury PLC (CBY) as the confectioner's chief executive, Todd Stitzer, reportedly accused the U.S. food conglomerate of letting Cadbury's share price "drift."

One London-based hedge fund manager with an interest in Cadbury stock said most shareholders would be happy to see a valuation of around 15 times the company's current-year earnings - or roughly 900 pence a share, valuing the chocolate bar maker at GBP12.3 billion - but that 850 pence, or around GBP11.7 billion, would probably be acceptable.

Hedge funds that have disclosed positions in Cadbury include New York-based Eton Park Capital Management and York Capital Management, also based in New York.

The potential deal, which would create a food giant with annual revenue of some $50 billion and a 15% share of the world's confectionary market, has been good news for hedge funds and other investors that specialize in mergers-and-acquisitions activity. A dearth of such activity amid the financial crisis and subsequently poor fund returns put many M&A-focused hedge funds out of business.

That means they probably don't have the collective weight they used to in helping call the shots in potential transactions, but survivors are still shaping up to be major players in situations such as Kraft-Cadbury by taking relatively large stakes.

Eton Park, for example, has a near-2% position in Cadbury shares currently worth GBP2 million, built up at prices as high as 788 pence. No one at the company's London office was immediately available to comment.

Kraft's bid for Cadbury on Sept. 7 came to about 745 pence a share, or GBP10.2 billion, comprised of 300 pence in cash and 0.2589 new Kraft Foods shares for each Cadbury share. A fall in Kraft's share price since the announcement means that valuation is now closer to 700 pence a share.

Shares in Cadbury were at 794 pence at 1451 GMT, up 5 pence, while Kraft shares were down 16 cents at $26.33.

Hedge funds and other shareholders are still hoping another bidder could emerge, a move that would likely lift the price to win Cadbury even higher. Analysts have argued that recent deals such as U.S. rival Mars' acquisition of Wrigley were at much higher multiples than the 12-times earnings Kraft is offering for Cadbury.

After Cadbury rejected the Sept. 7 bid, Kraft said it would keep working to get Cadbury to agree to it. Cadbury in turn is trying to convince investors of its strong prospects as an independent company.

Earlier Wednesday, Cadbury shareholders were surprised to see reports of comments by CEO Stitzer that 15 times the company's current-year earnings was a fair price. It was later clarified that Stitzer comments to investors at a Bank of America/Merrill Lynch conference in London on Tuesday had only been about comparable transactions having been made in the mid-teens.

The BoA/Merrill analyst who had reported Stitzer's comments in a note said Stitzer also accused Kraft of delaying coming back with a new offer "to watch Cadbury's share price drift on uncertainty."

Cadbury on Monday asked the U.K. Takeover Panel to ask Kraft to "put up or shut up" by either submitting a new bid or walking away.

-By Margot Patrick, Dow Jones Newswires; +44 (0)20 7842 9451; margot.patrick@dowjones.com (Michael Carolan contributed to this report.)