Warren Buffett, the world’s second-richest man and a leading shareholder in Kraft, warned the American food group yesterday not to overpay for Cadbury.

He said that Kraft, where he owns a 10 per cent stake, had already offered a “full price” for the British chocolate maker. He raised doubts over whether Kraft had enough shareholder support to raise its £9.7 billion bid significantly.

Speaking for the first time about the takeover battle, the highly influential Mr Buffett — known as the Sage of Omaha for his investment expertise — said: “Any time you’re in a takeover, the animal spirits run high and all of that, but Kraft has the disadvantage of using an undervalued stock.”

Shares in Kraft have fallen since the food conglomerate went public with its part-share, part-cash offer for the Creme Egg maker last week. As a result, Kraft’s offer, which was worth £10.2 billion to Cadbury’s shareholders last week, is now down to £9.7 billion.

Mr Buffett and Nelson Peltz, another American billionaire and activist shareholder, could play a key role in the takeover battle. Mr Peltz, who has yet to go public with his views, owns 5 per cent of Cadbury as well as a 0.6 per cent stake in Kraft.

Cadbury immediately rejected Kraft’s bid last week as undervaluing the group. In a weekend letter to investors, Roger Carr, the chairman, said that the prospect of being absorbed into Kraft’s “low-growth conglomerate business” was unappealing.

Todd Stitzer, the chief executive of Cadbury, declined yesterday to give any more detail on the company’s defence to Kraft’s approach.

Speaking to an annual conference for investment funds organised by Sanford Bernstein, the Wall Street research firm, Mr Stitzer said that he was confident that Cadbury had more to deliver, but he was restricted on what he could say by UK Takeover Panel rules after last week’s approach.

Cadbury’s shares closed 7p down at 786½p after the chocolate company went ex-dividend.

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