LONDON — Kraft Foods Inc. yesterday proposed a $16.7 billion takeover of Cadbury PLC, but the offer was immediately rejected by the British maker of chocolate, gum and candy.

Cadbury said the offer undervalued the company, and expressed confidence in its "standalone strategy and growth prospects as a result of its strong brands, unique category and geographic scope."

Kraft was undeterred, however, and said it would continue to seek a transaction that Cadbury's board could support.

Kraft, whose brands include Velveeta cheese product and Oreo cookies, said it had proposed paying 300 pence in cash and 0.2589 new Kraft Foods shares per Cadbury share, valuing Cadbury shares at 745 pence.

That represents a 31 percent premium over Cadbury's closing share price of 568 pence on Friday.

Cadbury has a 10.3 percent share of the world confectionary market in 2008, second only to Mars Inc. with 14.8 percent. Kraft was fifth at 4.5 percent.

Cadbury has 28.4 percent of the world gum market, Kraft has 0.1 percent.

ISLE-BASED FIRM STARTS KENTUCKY FLIGHTS

OWENSBORO, Ky. — A western Kentucky city has been reconnected to the world with the start of a new air service run by a Hawai'i-based company.

Owensboro Mayor Ron Payne said that KentuckySkies' air service between Owensboro and Nashville, Tenn., comes at a good time for the city, the Messenger-Inquirer in Owensboro reported.

"We're retooling the city," he said. "This sends a signal that Owensboro is alive and aggressive."

The new airline, run by Hawai'i-based Pacific Wings, will add flights through Nashville to Atlanta later this month. Flights to Atlanta will cost $87 each, said David Jones, the company's chief pilot. Flights to Nashville are $39.

The airline recently flew city and county officials from Owensboro to Nashville to meet with officials from Jackson, Tenn., which it also began serving last week — as TennesseeSkies.

EU NATIONS DEMAND AID FOR DAIRY FARMS

BRUSSELS — France, Germany and 14 other EU nations have demanded that more action be taken to protect farmers from the fallout of the financial crisis in the dairy sector.

The 16 farm ministers said in a joint statement that current measures to support threatened dairy farms are insufficient and need to be strengthened with more financial aid as soon as possible.

"To avoid the large-scale loss of farms, the European Union must take strong and concrete new measures," the ministers said in a statement. It would mean more funds from EU coffers for farmers across Europe.

Earlier yesterday, hundreds of Belgian farmers demonstrated outside European Union headquarters to demand more support.

KOENIGSEGG GROUP BUYING SAAB FROM GM

STOCKHOLM — Koenigsegg Group AB has secured the extra financing needed to complete the acquisition of Saab Automobiles from General Motors Corp., the Swedish government said yesterday.

Joran Hagglund, a senior official at Sweden's Ministry of Enterprise, told Swedish Radio that the consortium headed by sports car maker Koenigsegg has presented a financing plan for the deal to the government.

Koenigsegg Group signed a deal to buy the troubled Swedish car brand from GM in August, but said about $417 million was needed before it could conclude the deal.