* Cadbury and Kraft meet investors
* Await UK Takeover Panel ruling
* Cadbury shares flat, Kraft dips
(Recasts with further details, updates shares)
By Victoria Howley and David Jones
LONDON, Sept 22 (Reuters) - Kraft and Cadbury CEOs are meeting their investors to seek support in a bid battle after the British confectioner asked the UK Takeover Panel to set a time limit to Kraft's 9.8 billion pound ($16 billion) offer.
Cadbury's Todd Stitzer and Kraft's Irene Rosenfeld are attending the two-day Bank of America/Merrill Lynch Global Consumer and Retail Conference on Tuesday and Wednesday and meeting with investors individually or in small groups.
"Both are speaking to their investors today, but they are not expected to meet each other," one source with knowledge of the situation said.
Kraft is keen to talk to Cadbury's management about the cash and shares bid it launched two weeks ago, but Cadbury's has dismissed the offer as undervaluing the world's second-largest confectionary group.
Cadbury shares closed up 0.1 percent at 788-1/2 pence on Tuesday compared with Kraft's bid, which currently values Cadbury at 718p. Kraft shares were off 1.3 percent at $26.41 by 1540 GMT.
On Monday, Cadbury contacted the UK Takeover Panel to send a "put up or shut up" request to Kraft, under which the U.S. food group will be asked to make a formal bid within a set timetable or walk away for six months, sources close to the matter said.
The sources said the Takeover Panel was likely to give a ruling this week and expected it to give Kraft some four to eight weeks to make its formal offer. They added that this was likely to be towards the longer timeframe as the bid has only been made public for two weeks.
Bidders normally wait for as long as possible before making a formal bid. When Heineken and Carlsberg won a joint bid for Britain's last big brewer Scottish & Newcastle in 2008, the Takeover Panel gave the bidders five weeks to come up with a formal offer after a battle that had already lasted two months.
The speed of the "put up or shut up" request surprised the market, but the sources said it reflected the lack of a white knight bidder to deflect Kraft's approach. It also reflects Cadbury's desire to pressure Kraft on its financing for the bid.
"Kraft does not have unlimited firepower but can probably manage 850-860p, but it would come under pressure if Kraft shares start to fall," said one banking source.
Analysts say Kraft will need a bid of 850-900p to win Cadbury and not lose investment grade rating on its debt, and could increase its annual cost saving target of $625 million to help make the deal work financially.
Kraft needs to secure financing for an offer before presenting it to Cadbury, but the sources say Kraft should have little problem in doing so. Kraft is offering 40 percent of the bid price, or 300p, in cash and the rest in new Kraft shares. ($1=.6121 Pound) (Editing by Hans Peters and Lin Noueihed)