Kraft Foods was today told it must finalise its bid for Cadbury within the next six weeks, or else walk away.

The ruling from the Takeover Panel, the body which oversees bids for UK stockmarket-listed companies, was expected in response to prompting from Cadbury.

The giant US food firm — best known for processed cheese and Oreo cookies — revealed earlier this month that it had made an informal cash and shares offer for Cadbury then valued at £10.2 billion or 745p a share.

Kraft shares have since fallen lowering the value of the offer, while Cadbury's have soared.

Cadbury shares were up 1p at 800p in earlier trading. Analysts think Kraft might need to offer at least 900p to draw the Cadbury board into talks. Today the Takeover Panel imposed a deadline of 5pm on 9 November for Kraft to announce a firm intention to bid.

Cadbury chairman Roger Carr said: “We have made our position on Kraft's proposal very clear and welcome the panel's decision today in the interests of obtaining clarity and certainty for our shareholders and employees at the earliest opportunity.”

Kraft has been working in the background to secure financing to pay for its eventual offer.

It had no comment today.