According to the New York Post, the US manufacturer, which has three weeks left to table a formal offer for the UK confectioner, said it was considering a sale of the well know coffee brand to finance an increased bid.
The newspaper added that Kraft, according to sources close to the situation, were in negotiation to sell Maxwell House to Sara Lee.
The UK’s Takeover Panel announced a deadline of November 9 for Kraft to make a bid for Cadbury or to say that it does not intend to make an offer.
Companies that are targeted for takeover frequently approach the takeover panel seeking a so-called ‘put-up-or-shut-up’ action in order to minimize disruption to business and uncertainty for shareholders.
Kraft made an offer of £10.2bn (about $16.4bn) on August 28, but Cadbury rejected the bid, saying that it ‘fundamentally undervalued’ the company and that it ‘made no strategic or financial sense’ for Cadbury.
Cadbury is due to issue a third quarter update on Wednesday.
Recently a member of the Cadbury family has attacked the Kraft takeover bid and promised to mobilise family opposition.
Felicity Loudon, whose grandfather Sir Egbert Cadbury was managing director of Cadbury Brothers, expressed her sadness at the idea that Cadbury could be bought by an American company in an interview with the Sunday Telegraph.
Loudon said: ‘As a Cadbury, I obviously feel particularly saddened by the possibility of one of the last remaining British icons disappearing into an American plastic cheese company.’
She promised to defend Cadbury from the takeover but said her influence was limited because she only has a small number of Cadbury shares and is ‘not particularly close’ to her brother Justin Cadbury, and half-brothers Joel, George and James.