Kraft Foods Inc. (KFT) on Wednesday was given a six-week deadline to either make a formal bid for Cadbury PLC (CBY), the U.K. confectioner it has been stalking for the past three weeks, or walk away.

In response to a request from Cadbury, U.K. regulator the Takeover Panel issued its "put-up-or-shut-up" Wednesday. Kraft will have to present a formal offer either to the Cadbury board or directly to Cadbury's shareholders by 1700 GMT, Nov. 9 or abandon its bid to buy the company for at least six months.

So far, Cadbury has only received an informal approach from Kraft, which it immediately rejected. For the U.S. giant to make a formal bid, it will need to have all of its financing in place. Analysts believe it will also have to offer significantly more than the 745 pence a share it indicated three weeks ago, when the deal was valued at around 10.2 billion pounds.

"We have made our position on Kraft's proposal 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," said Cadbury Chairman Roger Carr in a statement.

The deadline should focus the minds of Kraft's and Cadbury's management after three weeks of claim and counter-claim from both parties which have dominated the press but failed to move the deal closer.

Even so, it could still be many weeks, or even months before a bid is finally accepted or rejected.

The near-six-week timeline is slightly longer than Cadbury would have hoped for. In the past the panel has given buyers as little as four weeks to make a bid.

As the process drags out, more of Cadbury's shares are likely to fall into the hands of short-term investors, hoping to make a quick profit by buying now in the expectation of a bid materializing. These shareholders are unlikely to turn down any offer, so long as it is above the price they paid for their shares.

"It wouldn't surprise if Kraft used the whole six weeks," said Darren Shirley at Shore Capital. "They'll want to see if there are any counterbids."

He expects Kraft to return with an improved offer.

If a bid were again rejected, Kraft could launch a higher offer or possibly even bypass Cadbury's board and go hostile. Either way, the Takeover Panel's deadline would cease to be relevant.

Nestle SA (NESN.VX) or Hershey Co. (HSY), or even both, are seen as the most likely counterbidders. If a third party joins the fray, the timeline for the bid could be extended still further. So far, neither Nestle nor Hershey have made a move and it is perhaps not in their interest to do so until Kraft shows its hand with a firm bid.

On Sep. 7, Kraft, based in Northfield, Ill., offered to pay 300 pence in cash and 0.2589 new Kraft Foods shares for each Cadbury share - valuing the U.K. company's share capital at GBP10.2 billion.

The bid was originally valued at 745 pence per Cadbury share, though a fall in Kraft's share price since the announcement means that valuation is now closer to 700 pence.

Kraft has so far pledged to continue working toward a recommendation from Cadbury for its bid despite a swift rejection from the Cadbury's board. "We've noted the decision and understand the implications," Kraft spokeswoman Lisa Gibbons said in a statement in response to the deadline.

(Anjali Cordeiro contributed to this article)

-By Michael Carolan, Dow Jones Newswires; 44-20-7842-9278; michael.carolan@dowjones.com