$143 billion deal could bring together the makers of Velveeta and Vaseline

Kraft Heinz, the maker of Velveeta, Kool-Aid and Grey Poupon, on Friday said it had made an offer to buy Unilever for $143 billion in what could be the largest food and beverage deal of all time.

Unilever, however, said it isn’t interested in the $50-per-share deal, which represented an 18 percent premium on Thursday’s share price. The British-Dutch company, which has 400 brands including Hellman’s, Ben & Jerry’s and Vaseline, said it “rejected the proposal as it sees no merit, either financial or strategic, for Unilever’s shareholders.”

“Unilever,” the company added, “does not see the basis for any further discussions.”

But Chicago-Pittsburgh-based Kraft says it isn’t taking “no” for an answer, and analysts say it is likely that the company will sweeten its cash-and-stock offer as it looks to Unilever to help expand its international reach.

Kraft said in a statement it is “working to reach agreement on the terms of a transaction.”

If the two packaged-food giants were to reach a deal, it would bring together hundreds of iconic brands, including Lunchables and Lipton, and Maxwell House and Marmite. The combined company would have annual sales of nearly $85 billion a year, just behind Nestle’s 2016 revenue of roughly $89 billion.

The purchase would also help U.S.-centric Kraft Heinz tap into European and Asian markets, which currently make up about 70 percent of Unilever’s annual revenue, and would help it expand beyond food and drink products.

“Geographically speaking, these two companies are very complementary,” said Paul Hickman, an analyst at Edison Investment Research in London. “You can see how putting them together would make sense.”

Packaged-food companies have been under pressure to consolidate in recent years amid slowing growth, increased competition and heightened demand for more healthful foods. Still analysts said they were surprised by the offer. Kraft Heinz is in the midst of cutting costs following the multibillion-dollar deal that brought together the J. Heinz Co. with Kraft Foods in 2015. Today, Warren Buffett’s Berkshire Hathaway and Brazilian investment firm 3G Capital own about 51 percent of Kraft Heinz. Buffett sits on the company’s board.

“For me, the deal makes no sense,” said Michael Hewson, chief analyst for CMC Markets in London. “Kraft could get a very big dose of indigestion if they decided to pony up for this one.”

For one, he said, Unilever – with roughly $58.7 billion in annual revenue and 168,000 employees – is larger than Kraft Heinz, which has $26.49 billion in annual revenue and 42,000 employees.

And, he said, the merger of two of the world’s largest packaged-food companies could also raise concerns among anti-trust regulators in the United States and Europe. And, he added, Unilever shareholders could be wary of the deal.

“Look at the way Unilever has performed over the last 20 years: Steady income growth – through recessions, through booms,” he said. “I’m not convinced long-term Unilever investors would want to pass that up.”

But so far, the markets have reacted favorably to the prospect of a Kraft Heinz takeover of Unilever. Shares of Unilever rose 15 percent to close at an all-time high on Friday following the announcement, while Kraft Heinz’s stock was up about 11 percent.

“Kraft Heinz has a very strong track record of acquisitions and being able to cut costs and create value by doing that,” said Brittany Weissman, an analyst for Edward Jones in St. Louis. “While Unilever might not be exactly what people were expecting, Kraft Heinz would still be able to find tremendous value in an acquisition like this.”

Hewman, though, added that Unilever shareholders may look to Cadbury, which Kraft bought in 2010, as a cautionary tale.

Kraft Foods had originally swooped in with a $16.2 billion takeover offer, which the British candy maker “emphatically rejected.”

“Kraft’s offer does not come remotely close to reflecting the true value of our company, and involves the unattractive prospect of the absorption of Cadbury into a low growth conglomerate business model,” Cadbury chairman Roger Carr was quoted saying at the time.

But three months later, the two companies had reached a deal. Kraft acquired Cadbury for $18.9 billion, and soon after shuttered a longtime British factory that it had promised to keep open. (Cadbury is now part of Mondelez International, following a 2012 spin off of Kraft’s confectionary business.)

“Kraft Heinz is a bit of a corporate raider,” Hewson said. “There’s still a nasty aftertaste in the mouth after what happened with Cadbury in 2010.”

On Thursday, Kraft Heinz reported a 44 percent increase in annual revenue, which rose to $26.49 billion in 2016. The company also reported a profit of $3.64 billion for the year. A few weeks earlier, Kraft Heinz announced it would be partnering with Oprah Winfrey to create a line of ready-to-eat refrigerated meals as it looks to add more fresh fare and nutritious foods to its lineup.

With Unilever, the company could grow even further by making the transition to household and personal goods such as Q-tips, Dove and Axe. Analysts said they expected Kraft Heinz to ratchet up its offer for the company. Erin Lash, an analyst for Morningstar in Chicago, said Kraft would likely have to offer $165 billion to $175 billion to successfully woo Unilever.

The takeover bid follows in the footsteps of Anheuser-Busch InBev SA’s $123 billion purchase of competitor SAB Miller Plc, which was completed in October.

“This is already a large deal,” Weissman said, “and it’s likely to get even larger.”

“This is clearly just the first roll of dice for Kraft,” Hickman said. “My sense is that this will run and run.”