WASHINGTON?US food giant Kraft on Tuesday sweetened its hostile bid for Cadbury with a bigger cash component, but faced a fresh rejection from the British firm and objections from its largest shareholder.

Kraft made its latest maneuver with the sale of its North American pizza division to Swiss rival Nestle for 3.7 billion dollars, enabling the US firm to put more cash behind its struggling bid for the British-based confectioner.

The sale, which is subject to regulatory clearances, includes the DiGiorno, Tombstone and Jack's brands in the United States, the Delissio brand in Canada and the California Pizza Kitchen trademark license.

Some 3,400 employees will transfer with the business to Nestle.

Kraft said it would use the proceeds from the deal to improve its bid for Cadbury, the British confectionery business which consistently has fended off its suitor.

A Kraft statement said the change reflected "the desire expressed by some Cadbury security holders to have a greater proportion of the offer in cash and because Kraft Foods shareholders have expressed a desire for Kraft Foods to be more sparing in its use of undervalued Kraft Foods shares as currency for the offer."

Cadbury, famous for its chocolate bars, said it saw no improvement in Kraft's bid which values the company at around 16 billion dollars.

"Kraft has once again missed the point. Despite this tinkering, the Kraft offer remains unchanged and derisory, with less than half the consideration in cash," a Cadbury spokesman said.

In a twist to events, billionaire investor Warren Buffett's holding company Berkshire Hathaway said that it opposed a plan by Kraft to raise cash needed to buy Cadbury via a new share issue.

Berkshire Hathaway, which said it is likely the largest shareholder in Kraft with a stake of 9.4 percent, said it had voted "no" on Kraft's proposal to authorize the issuance of up to 370 million shares to fund the acquisition.

The share issuance proposal "will give Kraft a blank check allowing it to change its offer to Cadbury -- in any way it wishes."

"To state the matter simply, a shareholder voting 'yes' today is authorizing a huge transaction without knowing its cost or the means of payment," the Berkshire statement said.

"What we know with certainty, however, is that Kraft stock, at its current price of 27 dollars, is a very expensive 'currency' to be used in an acquisition."

The statement pointed out that in 2007, Kraft spent 3.6 billion dollars to repurchase shares at about 33 dollars per share, "presumably because the directors and management thought the shares to be worth more."

The statement did not rule out support for a Cadbury bid but said Berkshire would decide after a final offer is announced by a deadline of January 19.

"If we conclude at that point that the offer does not destroy value for Kraft shareholders, we will change our vote to 'yes,'" the statement said.

Kraft spokesman Michael Mitchell said of the action by Buffett's firm: "We take his opinion seriously" and added that "we agree that Kraft Food shares are deeply undervalued."

The spokesman added that "we would certainly not do anything that hurts shareholder value."

A Kraft statement said it would extend the deadline for Cadbury shareholders to accept its offer until February 2.

Cash-rich Nestle meanwhile said it was not in the running for Cadbury, quashing rumors after Monday's massive $40 billion deal to sell its Alcon eye care operation to Swiss-based pharmaceutical giant Novartis.