Kraft is selling its North American frozen pizza business to Switzerland’s Nestle for the equivalent of just over 2.5 billion euros.
The purchase will make Nestle the world’s biggest seller of frozen pizzas.
With the cash raised Kraft will increase its bid for British confectionery firm Cadbury.
It has revised its more than 11 billion euro hostile takeover bid, trying to persuade Cadbury shareholders by increasing the cash component of its cash and shares bid.
Nestle disappointed those shareholders by saying it has no plans to launch a counterbid for Cadbury which would have pushed up the price.
Analysts believe the other prospective bidders – US firm Hersey and Italy’s Ferrero – do not have the resources to outbid Kraft.
Cadbury continued to call Kraft’s offer “derisory.”
It is still well below the market value of Cadbury’s stock and investors said Kraft will have to pay more to tempt shareholders.