Update 2: A deal was announced today, the deal did go through, Kraft will acquire Cadbury for about USD $19.7-billion. Kraft will pay 500 pence cash, 840 pence per Cadbury share and the remaining funds will be paid to Cadbury investors with cash. The acquisition has generated the largest chocolate-maker in history. You’ll be able to find complete details on the Kraft investors relations website, but it’s not up just yet for now.

Update 1: We are being told that a counteroffer from Hershey is not expected and that an announcement confirming the acquisition is likely Tuesday morning.

The board of the 186-year-old British chocolatier, Cadbury, has announced they favor and agree to a hostile takeover by American food company Kraft based on a revised offer.

The deadline for Kraft to increase its acquisition price expires tonight at midnight and our source tells us that Kraft will offer just over USD $19-billion, a significantly higher amount from the previous $17-billion offer that started in 2009. Cadbury management previously rejected an USD $18-billion offer from Kraft.

Reports indicate Kraft CEO Irene Rosenfeld was engaged in meetings with top-level Cadbury executives late tonight discussing Kraft’s new offer.

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Northfield, Illinois-based Kraft Foods released Q2 2009 profits, reporting a strong 11-percent increase in total profits to $827 million ($0.56 per share), compared to $745 million ($0.49 per share) in the same period last year.

The company managed to increase profits despite revenue falling by 5.9-percent to $10.16 billion (analyst expected $10.37 billion in revenue).

The savings could be attributed to a massive completed restructuring plan that saw to lower total costs and improve its product offerings. The company plans to cut an additional $50 million as part of its cost cutting plan.

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