Cadbury produces some of the UK's best-known chocolate bars
UK confectioner Cadbury has rejected a £9.8bn ($16.4bn) hostile bid from US food giant Kraft.
Cadbury said it had "emphatically rejected" what it saw as the "derisory" offer, which will now be put directly to its shareholders.
Kraft offered a mixture of cash and shares for each Cadbury share - the same terms it proposed in September.
As Kraft shares have dropped in value since then, the bid is now worth less than the original £10.2bn approach.
"Kraft's offer does not come remotely close to reflecting the true value of our company, and involves the unattractive prospect of the absorption of Cadbury into a low growth conglomerate business model," said Cadbury chairman Roger Carr.
Kraft offered 300p in cash and 0.2589 new Kraft shares for each Cadbury share.
Cadbury shares dipped slightly after Kraft made its new offer, but soon recovered to close up 3 pence at 761p.
John Cadbury, a Quaker, opened shop in Birmingham in 1824, selling tea, coffee and hot chocolate - as an alternative to alcohol
Dairy Milk brand introduced in 1905, with Milk Tray coming 10 years later
Merged with Schweppes drinks business in 1969. Its drinks arm was spun off in 2008
Employs about 45,000 people in 60 countries
In contrast, Kraft shares slipped 32 cents to $26.53 in New York.
Under Takeover Panel rules, Kraft had until 1700 GMT on Monday to make a new offer or it would have been blocked from making an approach for six months.
Kraft chairman Irene Rosenfeld questioned Cadbury's continued ability to stand alone.
"We believe that our proposal offers the best immediate and long-term value for Cadbury's shareholders and for the company itself compared with any other option currently available, including Cadbury remaining independent," she said.
Founded in Illinois as a cheese wholesaler in 1903
Bought in 1988 by Philip Morris, which also purchased Nabisco for $19.2bn in 2000 before integrating it into Kraft Foods
More than 40 of its brands are more than 100 years old
Has 98,000 employees and 168 manufacturing and processing facilities worldwide
Many investors had expected Kraft to increase its offer to tempt the board to back the proposal.
Weekend reports had said that some Cadbury shareholders thought 820p a share would be a "starting point" for discussions with Kraft.
"If shareholders get a sniff of £8.20 they will be obliged to sit down and talk about [the offer]," said David Buik at BGC Partners.
"If we do get to £8.20, then I think [a takeover] is a good thing," he added.
Shares in Cadbury have risen about 30% since late August.
Cadbury has 50,000 private shareholders. The largest is US investment management firm Franklin Resources, which owns just over 8%. Legal & General holds 5.2% of the firm.
Kraft will have 60 days from the posting of its offer document to gain shareholder's support for the bid unless a competitor enters the frame.
As well as Dairy Milk, Cadbury also owns the Green & Black's chocolate brand, Halls lozenges, Trident and Dentyne gum brands and liquorice allsorts maker Bassett's.
It spun off its drinks division as a separate business last year.
Kraft's brands include Kenco and Maxwell House coffee, Oreo biscuits, Jacobs, Terry's Chocolate Orange and Toblerone, as well as cheese products such as Philadelphia and Dairylea.