The Takeover Panel yesterday announced that US group Kraft Foods has until November 9 to make a firm bid for Cadbury or must walk away.
The regulator, which oversees the City Code over mergers and acquisitions, enforced its so called put up or shut up ruling after "recent representations made by the advisers to Cadbury".
Kraft lodged a bid valuing Cadbury at £10.2bn at the end of August, which the group rejected. Kraft published the terms of the 745p per share deal just over a week later. The confectionary group's board reiterated its rejection of the approach yesterday.
Should Kraft fail to lodge an improved bid, it would have to walk away from Cadbury for six months.
Cadbury, whose roots can be traced back to 1824, said Kraft's bid "made no strategic or financial sense and fundamentally undervalues" the maker of Dairy Milk. Kraft's brands include Terry's Chocolate Orange and Toblerone.
Cadbury's chairman Roger Carr said the group's position on Kraft's bid was "very clear and we welcome the panel's decision today in the interests of obtaining clarity and certainty for our shareholders and employees at the earliest opportunity".
So far speculation of a counterbid has proved unfounded. In the wake of the bid, Evolution Securities said that Nestle and Hershey could make a joint bid.