By Richard Fletcher, City Editor
The aggressive move – which comes just two weeks after Kraft's interest was made public – could spark a hostile takeover battle.
Cadbury's board rejected a proposed offer from Kraft earlier this month. The cash-and-share offer put an initial £10.2bn price tag on the Dairy Milk owner.
In an open letter to shareholders at the time Mr Carr described the cash-and-share offer as an "unappealing prospect'' from a "low-growth'' conglomerate.
It is understood that Cadbury's advisers approached the Takeover Panel on Monday and asked them to set a deadline for Kraft to either make a firm bid or walk away.
A spokesman for Cadbury refused to comment. However, a banker close to the group said: "It is a distraction to senior management. At some point they have to make an offer or walk away."
The Panel – which regulates bids – will consult with Kraft and its advisers before setting a deadline. If, as expected, the Panel backs the request, the deadline is likely to be sometime in October.
Irene Rosenfeld, the chief executive of Kraft, flew to London this week in an attempt to win support from Cadbury's shareholders for the group's bid.
A number of leading shareholders in Cadbury have publicly rejected Kraft's offer.
Legal & General, the largest shareholder in Cadbury with a 5pc stake, has argued that Kraft's proposal "materially undervalued" the group.
Nevertheless Cadbury's unusual decision to seek a "put up or shut up" deadline just two weeks after rejecting Kraft's initial approach could anger its own shareholders. Half of Kraft's top 20 shareholders own Cadbury shares.
Shares in Cadbury, which is the world's second biggest confectionery firm behind Mars, closed down 4 at 788p yesterday.
However, they are still trading at a premium to the value of Kraft's cash-and-shares offer in expectation of a higher offer from Kraft.
Some analysts have speculated that Kraft will need to bid as much as 850p to 900p to win Cadbury.
However, Kraft's biggest shareholder – billionaire Warren Buffett – has publicly warned the company against overpaying for Cadbury, arguing that Kraft has "a lot to do'' to justify the price offered.
To date, Kraft has been prepared to wait and let the market decide the fate of its bid, in the belief that a white knight bidder will not emerge for the 185-year-old British confectioner. However, a "put up or shut up" deadline could force the group to change tactics.
Bankers working for Kraft have been trying to raise finance, a clear signal that the group is prepared to launch a hostile bid.
A spokesman for Kraft declined to comment.
A deal between Kraft and Cadbury, would create a group with annual sales of around $50bn (£30.5bn).
Ms Rosenfeld has argued that it would be difficult for Cadbury "to go it alone'', claiming that "scale will be an increasing source of competitive advantage both in confectionery and in the food industry at large".
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