Marmite and PG Tips owner Unilever has rebuffed a proposed mega-bid from American food giant Kraft Heinz.

The company behind Heinz Tomato Ketchup and Philadelphia cheese confirmed it had made a ‘comprehensive proposal’ about combining the two companies, but Unilever turned the offer down.

The offer valued Unilever at $143billion (£115 billion), and would have been one of the largest mergers and acquisitions deals in corporate history.

Hungry: Kraft, which makes Heinz ketchup, has indicated it would continue working towards striking a deal despite today’s rejection

In a statement Anglo-Dutch firm Unilever 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.’

Illinois headquartered Kraft Heinz replied: ‘While Unilever has declined the proposal, we look forward to working to reach agreement on the terms of a transaction.

‘There can be no certainty that any further formal proposal will be made to the board of Unilever or that an offer will be made at all or as to the terms of any transaction.’

Unilever, which also owns Dove, Ben & Jerry’s ice cream, Domestos and Hellmann’s mayonnaise, saw its share price rocket 12 per cent in London on news of the approach.

Analysts said the deal would create huge cost savings across both groups.

Steve Clayton, fund manager at Hargreaves Lansdown, said: ‘Putting portfolios of brands together can create huge synergies across marketing, manufacturing and distribution, even before you think about cutting the combined HQ back to size.

Unilever – run by Paul Polman – said it does not see the basis for any further discussions

‘Kraft Heinz are attempting a massive push on the fast forward button, for to acquire the sheer scale of brands that Unilever represents through one-off acquisitions could take decades.

‘With debt cheap and abundant right now, Kraft have spotted their opportunity.’

He added: ‘To win over a majority of Unilever’s shareholders, we think Kraft Heinz will need to dig very deep indeed.’

But some have questioned whether regulatory authorities would sign off the deal, particularly given Kraft’s recent history.

In 2010, Kraft bought Cadbury for £11.5billion and quickly slashed jobs and closed factories.

It no longer owns the UK chocolate maker after spinning Cadbury off in a company called Mondelez.

Shortage: Unilever was locked in a stand-off with Tesco over a 10 per cent price hike, leaving Britain’s largest supermarket grappling with a shortage of Marmite, Pot Noodle and Persil

Unilever itself has been surrounded by controversy in recent months clashing with UK supermarket Tesco in October over its attempts to raise prices to compensate for the steep drop in the value of the pound.

Unilever chief executive Paul Polman said at the time that Britain should ‘get used to’ price rises following sterling’s Brexit-induced collapse.

The proposed tie-up comes amid a gloomy outlook for shoppers as the Brexit-hit pound begins to push up the cost of products on supermarket shelves.

Inflation reached a two-and-a-half-year high in January at 1.8 per cent after more expensive food and fuel bumped up the overall cost of living.

In 2015 Kraft completed its merger with Heinz, arranged by Heinz owners Berkshire Hathaway and 3G Capital, creating the fifth-largest food and beverage company in the world.

US billionaire Warren Buffett and Brazilian private equity firm 3G are still major investors in Kraft.

This article was sourced from