Sept. 8 (Bloomberg) -- Around the neat, red-brick houses and the cricket ground in Bournville, where the Cadbury family built their chocolate business amid the industrial sprawl of central England, the villagers are anxious.

Kraft Foods Inc. of the U.S., the world’s second-largest food company, is seeking a takeover of Cadbury Plc, their local employer, after the British chocolate maker rejected a 10.2 billion-pound ($16.7 billion) bid.

“I think they’ll destroy what Cadbury brought up,” said Kathleen Handley, 86, who worked for the company in Bournville for 23 years until 1982. “They’d help you out in a way that no- one else does any more. We didn’t want for anything.”

Cadbury was started in the 19th century by Quakers, a religious group that campaigned for social justice at a time when workers lived in slums and boys were used to clean chimneys. Over the years, its Dairy Milk chocolate in purple and white wrapping became a household name and is still to the British what Hershey bars are to Americans.

The brick Cadbury factory was built on fields in Birmingham, Britain’s second-largest city, and opened in 1879. The plant, which employs 2,500, or about 6 percent of the total Cadbury workforce, is surrounded by the houses that put up its workers, gardens, school buildings and a social club.

“Cadbury have fought them off for now but they’ll be back,” said Louise Griffiths, 60, who sells souvenirs. Should there be a foreign buyer like Kraft, “it will probably make them more remote from us, when Cadbury was always an integral part of Bournville.”

‘Huge Pride’

Cadbury shares soared 39 percent yesterday as investors bet Kraft’s offer might flush out competing bids from Switzerland’s Nestle SA and Hershey Co. of the U.S. The stock was up 2 percent to 798.5 pence at 9:30 a.m. in London, valuing the company at about 700 million pounds more than the Kraft offer.

Kraft, which is based in Northfield, Illinois, said that buying the U.K. company would create a “global powerhouse” with annual revenue of about $50 billion. The company said in its statement it aimed to “encourage and further” dialogue with Cadbury after its approach was rebuffed.

“Everyone has a huge pride and huge ties and I think most people will be worried by this development,” said Nigel Dawkins, a city councillor whose mother used to work at Cadbury.

As the U.K. entered recession, Birmingham, with a population of 1 million, experienced its fair share of job losses as local manufacturers fired or laid off workers because orders collapsed. Earlier, in 2005, MG Rover collapsed with the loss of 6,500 jobs at its Longbridge car plant, a few miles from Bournville. At its peak in the 1960s, Longbridge produced 40 percent of the cars bought in the U.K, including Triumph, Austin, Land Rover and Morris brands.

Bournville Brand

Employees at the Cadbury factory declined to comment yesterday as they filed home. The company makes chocolate brands such as Flake and Crème Eggs. Cadbury, which employs 45,000 worldwide, still sells chocolate carrying the Bournville name.

“Cadbury know and understand that Bournville is a huge part of the brand,” said Dawkins. “If Kraft buy it, it will just be another brand in the whole spectrum.”

The company goes back to a store in the city opened by John Cadbury in 1824 to sell tea, coffee and cocoa. After the business passed through the hands of various members of the Cadbury family, by the end of the 19th century the company was making milk chocolate aimed at beating Swiss rivals.

Society of Friends

John Cadbury was a member of the Religious Society of Friends, the group of puritans known as the Quakers who were barred from studying at universities and high-status professions such as lawyers and doctors, according to the Cadbury Web site. Bournville to this day is dry of alcohol.

As a result, they went into business in Victorian Britain. Former competitors of Cadbury in the confectionary industry also were founded by Quaker families, such as Frys of Bristol and York-based Rowntree Plc, acquired by Nestle in 1988.

The Quakers are pacifists and “work for peace and justice and to alleviate suffering,” according to their Web Site.

John’s son, George, and his brother took over Cadbury in 1861 and in 18 years later started making chocolate at the site they named Bournville. They expanded it to remove workers from their cramped dwellings in industrial Birmingham.

“I couldn’t imagine it going but I daresay it will,” said Frieda Richards, 90, who joined Cadbury when she was 14 and worked at the factory until she was 60. “It was marvellous. Cadbury was the place. I loved it, I practically lived here. You didn’t need anything outside.”

To contact the reporter on this story: Jonathan Browning in Birmingham, England jbrowning9@bloomberg.net.

Last Updated: September 8, 2009 04:39 EDT