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It will be bought for a price of 840p per share after Kraft increased its offer, following a number of rejections from Cadbury.
Shareholders now have until February 2nd to follow the board's recommendations and approve the transaction.
The news prompted Cadbury to climb in stock market trading and at 14:51 GMT the firm's shares were priced at 837p, an increase of 3.65 per cent on yesterday's closing value.
Roger Carr, chairman of the company, said that the deal "represents good value".
He added: "We will now work with the Kraft Foods' management to ensure the continued success and growth of the business."
Kraft, whose final offer is 13 times greater than Cadbury's earnings before interest, taxes, depreciation and amortisation, will have control of over 40 confectionary brands with annual sales of over $100 million (£61 million) once the deal is completed.
Posted by Chris Weaver
