Kraft told to increase bid for Cadbury

US raider Kraft could have to pay at least £12.4bn (€14.1m) to succeed in its hostile bid for Cadbury, one of the UK firm's major investors said today.

Standard Life, which owns less than 1% of the Dairy Milk maker, said the Dairylea-to-Oreos giant would have to pay "above £9" a share to win its support.

Kraft has until tomorrow to raise its offer for Cadbury - currently worth around £10.5bn (€11.9bn) - but speculation of a counter-bid from US rival Hershey is mounting.

Speaking to the BBC's Today programme, David Cumming of Standard Life Investments praised Cadbury's management as well as its potential to grow sales and margins.

"If Kraft want to get Cadbury they need to pay a full price to get long term shareholders ... on their side and that price would have to be, in my view, above £9 a share."

Weekend reports suggested that Kraft could raise its bid to between £8 and £8.50 but Mr Cumming added: "That would not secure support from companies like ourselves."

Standard Life is the second major investor in Cadbury to break cover in recent days as the deadline for Kraft to make its move draws nearer.

Legal and General Investment Management said on Friday that the current Kraft "bid does not reflect the long term value offered by the company on a stand alone basis".

Kraft has so far increased the cash portion of its offer without raising the overall bid, which the Cadbury board has described as "derisory". It is under pressure not to over-pay from its biggest shareholder, billionaire Warren Buffett.

Mr Cumming said he expected a new bid from the US company.

"Kraft need Cadbury to accelerate its growth into higher growth product categories like gum and chocolate but they also need to diversify into faster growing regions like South America and Asia and Cadbury have got a strong position there, so I do expect them to make a bid," he added.