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Kraft Foods chief Irene Rosenfeld stuck to her guns in the pursuit of Cadbury, refusing to sweeten her $16.4 billion offer, triggering a bid battle that could last up to three months.

The North American food giant Kraft today repeated the cash and shares terms of its original approach, which Cadbury rejected two months ago, and took its bid, now worth 4 per cent less after a fall in Kraft shares, directly to Cadbury shareholders.

Cadbury lost no time rejecting the "derisory offer", as chairman Roger Carr termed it.

MsRosenfeld has repeatedly insisted she will not overpay for Cadbury, while Cadbury's chief executive Todd Stitzer has said a link-up with Kraft made no strategic sense and it has a strong future as an independent sweetmaker.

"We remain convinced of the strategic merits for both companies of combining Kraft and Cadbury," Ms Rosenfeld said in the formal offer statement.

Cadbury's shares fell sharply to 739p after the unchanged bid terms were announced but had edged back to stand up 0.3 percent at 760p by 2.45pm Irish time.

"Kraft's offer does not come remotely close to reflecting the true value of our company, and involves the unattractive prospect of the absorption of Cadbury into a low-growth conglomerate business model," Cadbury's Carr said.

The formal bid values Cadbury shares at 713p or £9.8 billion, compared with 745p a share, or £10.2 billion, at the time of Kraft's approach in September.

Kraft is offering Cadbury shareholders 300p in cash and 0.2589 new Kraft shares for each Cadbury share, unchanged from the September offer. Kraft's move now gives it 28 days to post its official offer document to Cadbury shareholders, which will then trigger the 60-day bid timetable under UK takeover rules.

The bid for Cadbury was expected after the UK Takeover Panel had ruled that Kraft had to make a formal bid by 5pm today or walk away for six months.

Cadbury is the world's second-largest confectionery group, while Kraft is number five, with brands such as Toblerone, Cote D'Or, Terry's and Suchard. Bringing them together would pip privately owned Mars-Wrigley to the global No 1 spot.