Kraft Heinz, the worldwide food company behind favourites such as Heinz Tomato Ketchup and Philadelphia cheese, has approached consumer goods giant Unilever about a possible merger.
Unilever, an Anglo-Dutch company, is one of the biggest firms listed in Britain and owns well-known brands including Persil, Dove and Marmite.
It was recently involved in a disputewith supermarket Tesco due to attempts by the firm to raise wholesale prices by up to 10%, following the collapse in sterling after the Brexit vote.
The offer made by Kraft Heinz was worth over £115bn, but in a statement released on Friday Unilever said the terms of the bid "fundementally undervalues" the company.
"Their proposal represents a premium of 18% to Unilever's share price as at the close of business on 16 February 2017," the firm said.
"This fundamentally undervalues Unilever.
"Unilever rejected the proposal as it sees no merit, either financial or strategic, for Unilever's shareholders.
"Unilever does not see the basis for any further discussions."
But Kraft Heinz struck a more hopeful note, saying: "Kraft confirms that it has made a comprehensive proposal to Unilever about combining the two groups to create a leading consumer goods company with a mission of long-term growth and sustainable living.
"While Unilever has declined the proposal, we look forward to working to reach agreement on the terms of a transaction."
The firm warns however that agreeing a deal with Unilever is by no means assured.
Unite, the union representing many Unilever workers, urged Unilever to continue to resist the takeover attempt, saying that any change in management would lead to "job losses and poorer products for customers".
Unite national officer Rhys McCarthy said: "Unite is seeking an urgent meeting with Unilever senior management where we will seek assurances that the company will resist this predatory takeover by Kraft Heinz.
"Unite members make household products which are much loved by UK consumers.
"Kraft Heinz and their backers' reputation for cost cutting, we believe, will lead to great brands being harmed through job cuts and a never ending drive to push costs down.
"This takeover bid, is we fear, driven by a desire for a growth in sales, not through product innovation and maintaining great brands, but by gobbling up a major competitor and slashing costs to generate a quick buck."
Kraft Heinz, which is listed on the US stock market, has an estimated value of £85bn while Unilever is thought to be worth around £101bn.
If the two companies were to agree a deal it could represent the biggest takeover of a British company ever seen.
Heinz purchased Kraft in 2015, creating the third largest food and drinks company in North America at the time and the fifth largest worldwide.
The firm is controlled by a partnership between a company run by American business magnate Warren Buffett, Berkshire Hathaway Inc, and Brazilian investment firm 3G Capital.
Shares in Unilever rose 11% on the news, while Kraft Heinz shares jumped by more than 8% on the opening of the US markets.
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