Marmite-maker Unilever rejected the US food giant’s bid on Friday, saying it saw “no merit, either financial or strategic” in Kraft’s offer, worth about $143bn (£115bn).
“Unilever and Kraft Heinz hold each other in high regard,” the companies said in a joint statement.
The deal would have been one of the biggest in corporate history, combining dozens of household names.
Unilever owns Ben & Jerry’s ice cream, Dove soap, and Hellmann’s mayonnaise, while Kraft’s range includes Philadelphia cheese and Heinz baked beans.
“It would appear that Kraft Heinz have underestimated both the intrinsic value of Unilever and the challenge of acquiring control of a Dutch company whose stakeholders would have opposed such a move vociferously,” said Martin Deboo, a consumer goods analyst at Jefferies International.
More than half of the company’s shares are in the Dutch-listed entity, he told the BBC.
Michael Mullen, a spokesman for the company, said by email: “Kraft Heinz’s interest was made public at an extremely early stage.
“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.”
UK Prime Minister Theresa May had asked officials to examine the deal before it was scrapped, the Financial Times has reported.
The takeover of Cadbury by Kraft in 2010 was controversial enough to prompt a revamp of the rules governing how foreign firms buy UK companies.
Just a week after promising to keep open Cadbury’s Somerdale factory, near Bristol, Kraft backtracked and said it would close the plant.
The Panel of Takeovers and Mergers reviewed the laws and in September 2011 and strengthened the hand of target companies, and demanded more information from bidders about their intentions after the purchase, particularly on areas such as job cuts.
In July last year, shortly after becoming prime minister, Mrs May promised to have a “proper industrial strategy” that could be used to block takeovers.