Comment: Gloves off as the mega-deal returns

Suddenly, the big bid is back. They set the pulse racing these mega-takeovers: household names, billions of pounds, huge personalities (and egos), head to head, locked in combat. Kraft going for Cadbury has to be a sign of renewed economic confidence. The US firm is part-owned by Warren Buffett, for heaven's sake. Let's rock and roll.

It is though a mystery as to why Kraft has made the announcement right now. News of the bid did not leak out so there was no discernible shift in the Cadbury share price; Kraft's 745p-a-share offer had been turned down flat. It might have been better, surely, to have waited and come back with something that the UK company's board and the market might be impressed by and could be an agreed deal, rather than this mealy-mouthed approach?

It's hard to see what Kraft thinks it's achieving — apart from uniting Cadbury's shareholders in forcing the Americans to pay a lot more and alerting Cadbury's competitors that the chocolate-maker might be in play.

The move also seems a little late. Cadbury did go through a well-documented bad patch about 18 months ago but since then, the company, under new chairman Roger Carr and CEO, Todd Stitzer, has been moving forward. It's half-way through a "Vision into Action" growth programme, aimed at pushing operating margins from 10% to the mid-teens by 2011. Stitzer, an American prone to management-speak, has not always enjoyed universal City support but he has proved to be a survivor and is not afraid to reshape the business, demerging brands and adding others. And it's not as if Kraft itself is in fine fettle — it is especially weak in the emerging markets where Cadbury is strong.

If Kraft is going to get anywhere it is going to have to raise its bid. When Mars bought Wrigley's gum (orchestrated by Buffett) it paid 19 times ebitda. That would mean it was looking at £11 a share for Cabdury. But that was in April 2008 before the collapse of Lehman, the banking crisis and global recession so that price may be unattainable. Nevertheless, Kraft will have to pay rather more than 745p.

That's all further down the road — if it happens at all. For now, we can sit back and enjoy the sound and spectacle of the gloves coming off.