Kraft Foods Inc. is poised to launch a hostile bid for Cadbury PLC, The Observer said, citing unnamed sources.
Kraft earlier this month made a $16.7 billion (£10.5 billion) stock-and-cash proposal that was rebuffed by the confectionary company.
Cadbury has repeatedly said it is not interested in a takeover but the US food maker has said it remains focused on continuing negotiations.
According to the paper, Kraft is valuing Cadbury at £11 billion.
The U.K. takeover panel is expected to set a deadline soon for Kraft to put a firm offer on the table or walk away for at least six months. The company is reportedly putting the final touches on a financing package, which would enable it to offer about half the package in cash and half in stock.
Northfield, Illinois-based Kraft could not be reached for comment.