While Kraft and Unilever retreated Tuesday, they kept a good share of Monday's gains on speculation that industry consolidation could still happen.
Kraft Heinz is owned by the conglomerate Berkshire Hathaway, led by billionaire Warren Buffet, and the Brazilian private equity company 3G, who have a reputation for ruthless cost-cutting.
"Kraft Heinz's interest was made public at an extremely early stage", its spokesman Michael Mullen said on Sunday in an e-mail.
As The New York Times reports, the offer "came as consumer-goods companies are being squeezed by fluctuating currency rates, such as the strong United States dollar in Kraft Heinz's case, and higher prices for staples used in their products". Although this particular merger is off, investors sense that big food groups are in a dealmaking mood, and Unilever may soon entertain offers for some or all of its assets from another suitor. While the work was in progress on this merger of two well-known companies that had sent shockwaves throughout the FMCG sector, the UK Prime Minister Theresa May ordered a scrutiny in the bid.
Kraft Heinz makes Oscar Mayer luncheon meats, Philadelphia spreads and Maxwell House coffee, among other things.
U.S. company Kraft Heinz's rapid retreat from its surprise bid for Unilever sent the Anglo-Dutch group's shares down over seven percent on Monday in London and Amsterdam.
Unilever is the fourth largest seller of packaged food worldwide - behind Nestle, PepsiCo, and Mondelez - and Kraft Heinz is the fifth.
Possible UK government opposition to the deal may have been one factor that dissuaded Kraft Heinz from increasing its offer. The combination of Kraft and Heinz two years ago created the fifth largest. Our intention was to proceed on a friendly basis, but it was made clear Unilever did wish to pursue a transaction. Thus, it is better to call it off and let both the companies focus on their own business goals.
It said the valuation of its shopping centres, including Birmingham's Bullring, had dropped by £6m, with the value of its retail parks down £39m.
According to an anonymous source familiar with the deal, Kraft withdrew the offer as negotiating a deal after public disclosure was hard.
"Kraft didn't realise how hostile their approach would be perceived", one source said.
Unilever shares rose by 13 percent while Kraft shares rose by 11 percent on Wall Street.