Kraft Heinz drops £115bn Unilever takeover bid after offer rejected as 'too low'

Kraft Heinz has dropped its £115bn ($143bn) offer to buy Unilever after the bid was rejected as too low.

The companies announced the decision in a joint press release, saying that Kraft Heinz has “amicably” withdrawn the offer.

Analysts say Kraft Heinz, co-headquartered in Chicago and Pittsburgh, is still in the market for acquisitions. The fact that it made a bid for all of Unilever and not just its food business indicates that Kraft Heinz is potentially open to acquiring other packaged consumer goods, one analyst said.

Unilever rejected the offer last week, but despite that Kraft Heinz said at the time that it was still interested in the deal.

Unilever, which has a headquarters in London, owns Marmite, Ben and Jerry’s ice cream, Dove soap and Hellman’s mayonnaise while Kraft’s products include Philadelphia cream cheese and Heinz baked beans.

Had the deal gone through, the combined company would have rivalled Nestle as the world's biggest packaged food maker in terms of sales.

Such acquisitions might not lead to changes that customers would notice on supermarket shelves or in the recipes of well-loved brands, but shifting tastes are partly driving deal-making in the food industry.

Part of the challenge is the proliferation of smaller food makers marketing products that seem more wholesome, which makes it harder for the established companies to drive up sales simply by selling more of their well-known products or by raising prices, as they have in the past.

“That obviously has its limits,” said David Garfield, head of the consumer products unit at consulting firm Alix Partners, said last week.

Instead, major packaged food companies are being forced to dig deeper to find cost efficiencies or tap into new markets, Mr Garfield said.

That can include mergers that result in consolidated manufacturing systems, or that give companies access to distribution networks in regions of the world where they don't have a big presence.