U.S. food firm Kraft Heinz Co. withdrew its proposal for a US$143-billion merger with larger rival Unilever Plc., the firms said Sunday, raising questions about whether Kraft could turn its focus to another target.

    Kraft had made a surprise offer for Unilever to build a global consumer goods behemoth that was flatly rejected 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 soon after its approach to Unilever, according to sources familiar with the matter.

    Kraft had not expected to encounter the resistance it received from Unilever, one of the sources said. Some key concerns raised during talks included potential scrutiny from the U.K. Government, as well as differences between the companies’ cultures and business models, the sources added.

    “Kraft Heinz’s interest was made public at an extremely early stage,” Kraft Heinz spokesman Michael Mullen said in a statement. “Our intention was to proceed on a friendly basis, but it was made clear Unilever did not wish to pursue a transaction. It is best to step away early, so both companies can focus on their own independent plans to generate value.”

    Kraft was forced to publicly disclose its offer Friday to comply with Britain’s takeover regulations, after rumors of its approach to Unilever circulated among stock traders.

    Under U.K. takeover rules, Kraft’s public withdrawal of its offer precludes it from reviving takeover talks with Unilever for six months.

    The firms 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 U.K.-based company, according to Thomson Reuters data. The combined entity would have US$82 billion in sales.

    A merger would have been put under the microscope by U.K. regulators. (SD-Agencies)