Kraft on Monday left open the door to increasing its hostile £9.8bn offer for Cadbury, refusing to rule out a higher bid to win over shareholders of the British confectionery group.

Cadbury defiantly rejected the formal bid from Kraft launched on Monday, describing the US food group’s offer as “derisory” after it did not alter the terms of its approach two months ago. Roger Carr, Cadbury’s chairman, declared the formal offer “worse than the proposal the board has previously rejected”.

A fall in Kraft’s share price since early September has reduced the value of the bid to 717p from 745p. Cadbury’s shares closed up 3p at 761p in London, while Kraft’s shares fell 31 cents in New York in midday trading to $26.47.

However, Kraft did not rule out making a higher offer during the formal takeover offer period, which could last up to three months as the US food group tries to get the approval of Cadbury shareholders.

Analysts said Kraft may wait until the end of the offer period before making any increase.

Jeremy Batstone-Carr, analyst at Charles Stanley, said: “Kraft will dig in and wait before raising its offer in the hope that Cadbury’s subsequent trading record deteriorates from the strong performance delivered over the third quarter.” The Kraft bid, which offers 300p in cash and 0.2589 shares in the US group for every Cadbury share, disappointed investors hoping to see a higher offer and an increased proportion of cash. Kraft said that its existing offer, which represents a 26 per cent premium to Cadbury’s share price of 568p in early September before the US group went public with its indicative proposal, would help it create “a global confectionery leader” at time when confectionery markets are consolidating and scale is becoming more important.

Cadbury – from corner shop to global brand

FT interactive graphic charting Cadbury’s evolution from corner shop to global brand, as Kraft, the US food group, proposes to take over the UK confectionery group

Irene Rosenfeld, Kraft’s chief executive, said: “We remain convinced of the strategic merits for both companies of combining Kraft Foods and Cadbury.”

Mr Carr countered: “The repetition of a proposal which is now of less value and lower than the current Cadbury share price does not make it any more attractive,” Top Cadbury shareholders supported Mr Carr’s decision to reject Kraft’s initial proposal in late August and have consistently said they will not seriously consider any offer that values Cadbury at less than 800p a share.

Kraft said a an acquisition of Cadbury would allow it to revise its long-term revenue growth targets to more than 5 per cent, from 4 per cent, and its earnings per share growth targets to 9-11 per cent, from 7-9 per cent.

The US food group noted that no other companies had shown interest in buying Cadbury to date. “Kraft Foods believes it is the most logical acquirer of Cadbury,” it said in its offer.