US food giant Kraft Heinz has said Unilever, which makes goods from Marmite to PG Tips, has rejected its takeover offer.
But Kraft, whose brands include Heinz ketchup, indicated it would continue working towards striking a deal.
Shares in Unilever, which is listed on the UK’s FTSE 100 stock index, have surged more than 11%.
The deal would be one of the biggest in corporate history, with Unilever currently valued at more than £100bn.
Kraft said in a statement that it had made “a comprehensive proposal” for Unilever to create a “leading consumer goods company”.
“While Unilever has declined the proposal, we look forward to working to reach agreement on the terms of a transaction,” the company added.
‘Test the water’
Analysts said Kraft was likely to return for another offer for Anglo-Dutch giant Unilever, which also makes Ben & Jerry’s ice cream, Dove soap, Domestos cleaning products and Hellmann’s mayonnaise.
“With Kraft Heinz saying it’ll be coming back to the table, it looks like the initial offer was just to test the water,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.
The offer for Unilever was rumoured to be around £40 a share – a premium of almost 20% on its opening price on Friday, he added.
Other analysts said the deal was likely to come under intense scrutiny from competition regulators.
“It could come up against a number of hurdles as it would create a giant in the sector. EU regulators in particular could be against it,” said Neil Wilson, an analyst at London broker ETX Capital.
US billionaire Warren Buffett is a major investor in Kraft Heinz, which also makes Philadelphia cheese and Heinz baked beans.
Kraft merged with Heinz in 2015, and has previously been reported as a potential bidder for Cadbury’s owner Mondelez.