Cadbury said in a statement that interest in its Americas Beverage division from potential buyers "remains strong" and that the sale process is ongoing.
"However, the leveraged-debt markets have experienced extreme volatility in recent days. As a result, a decision has been taken to extend the sale timetable to allow bidders to complete their proposals against a more stable debt financing market," the company said.
Cadbury Schweppes did not say when the auction would resume.
Shares of Cadbury dropped 0.3% in London, off early lows. In the last week, shares have dropped about 8%, as it became increasingly clear the company was running into trouble with the sale in the current market environment.
Some in the market were pleased Cadbury did not scrap the sale altogether.
Wall Street companies in the last week have been unable to raise money from the credit markets for private-equity firm Cerberus Capital Management's buyout of most of Chrysler or for the leveraged buyout of General Motors Corp.'s Allison Transmission.
A deal to sell $10.3 billion in loans from the leveraged buyout of popular U.K. retailer Alliance Boots PLC was delayed because the banks arranging financing for buyer Kohlberg Kravis Roberts failed to sell senior loans backing the deal.
The unit that Cadbury is trying to sell makes drinks including Dr Pepper, Snapple and 7-Up. Analysts estimate the division will be sold for between 7 billion and 8 billion pounds ($14 billion to $16 billion).
Cadbury said in March it was going to split off the beverages arm either through an initial public offering or sale, as it believed the beverages division would be better suited to operate independently of its candy-making division.
Cadbury announced in June that it was more likely to sell the division outright.
From the July 30, 2007, Prepared Foods e-Flash