Kraft has until Tuesday to raise its bid
A major Cadbury shareholder has indicated that US food giant Kraft will have to increase its hostile takeover offer if it wishes to win support.
Legal & General Investment Management, which owns 5% of Cadbury shares, said Kraft's current offer did not meet "the long term value" of the UK firm.
The comments come ahead of Tuesday's deadline for Kraft to increase its offer to Cadbury shareholders.
Meanwhile, a report said Hershey was planning a rival bid for Cadbury.
The Wall Street Journal said chocolate group Hershey, also a US company, may bid next week.
Kraft's current bid is worth less than Cadbury's share price.
Kraft is currently offering £10.5bn or 761p per Cadbury share, which has been rejected by the chocolate-maker's shareholders.
This compares to Cadbury's Friday closing share price of 793.5p.
Hershey's planned offer is said to be £10.74bn, although the firm has declined to comment on the report that it is preparing a bid.
Earlier this week Cadbury reiterated that its shareholders should reject Kraft's takeover bid, as it said it enjoyed an "outstanding" performance in 2009.
The UK confectioner said its financial performance last year was well ahead of market expectations.
"Don't let Kraft steal your company with its derisory offer," said Cadbury chairman Roger Carr, adding that Kraft was likely to cut jobs in the UK.
Kraft launched its hostile takeover bid for Cadbury in December.
So far it has increased the cash element of its offer, but not the overall amount of £10.5bn, as it has faced pressure from its leading shareholder - US billionaire investor Warren Buffett - not to overpay.
It has until 19 January to decide whether to raise its offer for Cadbury. If its final offer is rejected, it will then have to wait another year before it can bid again.
Many analysts expect it to return with a higher offer, but it remains to be seen whether it will be enough.
Kraft remains the only current declared bidder for Cadbury, after Swiss food giant Nestle ruled itself out.