US food company Kraft Heinz Co withdrew its proposal for a $143bn (€134bn) merger with larger rival Unilever Plc, the companies said today, raising questions about Kraft's next steps and whether it could turn its focus to another target.
Kraft had made a surprise offer for Unilever in a bid to build a global consumer goods behemoth that was flatly rejected on Friday by Unilever, the maker of Lipton tea and Dove soap.
Kraft withdrew its offer because it felt it was too difficult to negotiate a deal following the public disclosure of its bid so early following its approach to Unilever, according to sources familiar with the matter who requested anonymity to discuss confidential deliberations.
Some key concerns raised during talks included potential UK government scrutiny as well as differences between the companies' cultures and business models, one of the sources said.
Kraft was forced to publicly disclose its offer to Unilever on Friday to comply with Britain's takeover regulations, after rumours of its approach to Unilever circulated among stock traders.
Under UK takeover rules, Kraft's public withdrawal of its offer precludes it from reviving takeover talks with Unilever for six months.
The companies did not provide details of the reason for ending the discussion in a statement.
A combination would be the third-biggest takeover in history and the largest acquisition of a UK-based company, according to Thomson Reuters data. The combined entity would have $82bn (€77bn) in sales.
A merger would have been put under the microscope by UK regulators.
This weekend, British Prime Minister Theresa May ordered top officials to investigate the proposed deal to see if it posed any potential threats to the country's economic interests, the Financial Times reported.
Mrs May has been adamant that the government should play a more active role in vetting proposed foreign acquisitions of UK companies. She had previously singled out Kraft's 2010 acquisition of another British household name, Cadbury Plc, as an example of a deal that should have been blocked.