Choc Wars Update. Ambassador, with this White Knight bid you might really be spoiling us

Ferrero SpA, headquarted in Piedmont in Italy, started in 1946, and from 1957 was built up by the founder's son Michele Ferrero to become a major international firm. It has a turnover of €6.2 billion (or £5.5 billion - around the same size as Cadbury itself), 18 factories and employs around 22,000 workers.

A tie up with Hershey (which has a licensing agreement with Cadbury to make and sell Dairy Milk in the US) would also open up funding sources for the family owned Ferrero firm.

Kraft, owner of brands as diverse as Maxwell House, Dairylea cheese and Toblerone chocolate, has until December 7th to post its takeover bid to Cadbury shareholders. Cadbury will then have a further 11 days to prepare its final defence.

Some key Cadbury investors have stated via the media that the Kraft bid, which offers 300p and 0.2589 Kraft shares for each Cadbury share (in effect 717p a share when announced), undervalues the business. Many feel that 800p a share is the point at which they might begin considering a Kraft bid. Meanwhile, Hershey is believed to be interested in bidding but may not have the capital to take on Kraft alone.

A possible bid may well be welcomed by Cadbury as part of its defences against a Kraft hostile takeover, and would force Hershey to raise its bid. The other factor to bear in mind is that hedge funds and investment banks have piled into Cadbury shares in the hope of a takeover and making a quick profit, potentially destabilising the shareholder base that Cadbury management has to appeal to.

Whilst a Ferrero/Hershey bid would definitely be welcome in fending off the lustful but dull Kraft, and could potentially offer Cadbury management and workers some long-term security, surely retaining corporate control in the UK with Cadbury itself remaining independent remains the first best option for the UK economy and workers?

All of this reinforces a point that I have stressed repeatedly. Takeovers are hugely wasteful from an economic and social point of view. Leaving aside the resulting reduction in competition and the job losses from 'cost savings', takeovers frequently destroy shareholder value, through disruption and higher rather than lower costs.

Making takeovers more difficult and opening up long-term sources of investment funding for UK firms remains an essential part of what is needed post credit crunch. It is disappointing that a more fundamental restructuring of finance-industry relations seems off the Labour government's radar. An opportunity for genuinely beneficial change is being missed here.

PS There was a funny Ferrero reference tucked away in the hilarious recent film In the Loop. The original Ferrero Rocher ad is still widely remembered, with a guest at the Ambassador's party saying "Monsieur, with these Rocher, you're really spoiling us". Malcolm Tucker (of 'The Thick of It' fame) says in the film: "Ambassador, with your baldy head you are spoiling us." Certainly the funniest film I've seen this year.

Professor David Bailey works at Coventry University Business School.