Unilever has rejected a surprise $143 billion takeover bid from US food company Kraft Heinz today, saying it saw no reason to discuss a deal which it said had no financial or strategic merit.
Unilever, the maker of Lipton tea and Dove soap, said the $50 per share offer undervalued it and recommended its shareholders take no action.
But Kraft Heinz said it looked forward to "working to reach agreement on the terms of a transaction".
Analysts saw this as a sign Kraft was open to a higher bid, although the Anglo-Dutch company said in a statement it saw no basis for further talks.
Unilever shares jumped as much as 14% to a record high today. They were up 13% at £37.79 this afternoon, short of the offer price.
A combination of the two multinationals would be the third-biggest takeover in history and the biggest ever acquisition of a UK-based company, according to Thomson Reuters data.
The Kraft Heinz approach comes as the global packaged food industry grapples with slowing growth, new competition from upstart brands, deflation in developed markets and increasingly health-conscious consumers.
Unilever has a larger presence than some peers in emerging markets, which were once the big driver of industry growth, but which have slowed in recent years.
It is also feeling the after-effects of Britain's decision to leave the European Union.
Although Kraft is smaller than Unilever, with a market value of $106 billion as of yesterday, it is 50.9% owned by billionaire Warren Buffett's Berkshire Hathaway and 3G Capital, the private equity firm that also controls Anheuser-Busch InBev.
It has been widely expected to do a deal this year, given earlier reports that 3G had raised a new fund.
3G has orchestrated a string of big deals rocking the food and drink industry, including Anheuser-Busch InBev's takeover of SABMiller and the combination of Kraft and Heinz.
Unilever said Kraft's proposal represented an 18% premium to its share price yesterday, the day before news of the bid was announced in a stock market statement.
It said Kraft's proposal included $30.23 per share in cash, payable in dollars, and 0.222 of a share in a new enlarged entity per Unilever share.
A deal would offer opportunities to combine marketing, manufacturing and distribution in addition to cutting costs.