Kraft Foods Inc is in talks to sell its Maxwell House coffee business to Sara Lee Corp in a move that would give it more money to increase its bid for Cadbury Plc, the New York Post reported on Friday, citing one source.

Spokesmen for both Kraft and Sara Lee declined to comment on the report, which cited a source closely following the situation, citing company policy against commenting on rumors or speculation.

On Sept. 7, Kraft, the world's second largest food maker, disclosed an offer to buy British chocolatier Cadbury for a deal then valued at $16.7 billion, or 745 pence per share.

With declines in Kraft shares, and fluctuation in the dollar-pound exchange rate, the bid is currently valued at about $16.1 billion, or 721 pence per share.

Cadbury shares were trading at 785 pence on Friday, off 0.1 percent, and Kraft shares were unchanged at $26.63.

Sara Lee shares were up 4 cents at $11.05.

(1 stg=$1.63)

(Reporting by Brad Dorfman, editing by Gerald E. McCormick)