Mubasher: Unilever on Friday rejected Kraft Heinz’s $143 billion merger deal, stating that the deal “fundamentally undervalues the company”.

Despite the rejection, Kraft said it still has hopes of reaching an agreement, the Wall Street Journal (WSJ) reported.

WSJ analysts say the deal, if executed, would have been the second largest merger worldwide, whereas analysts polled by Reuters say the deal would be the third largest.

The merger would have brought about consumer goods giant that would have built on Kraft’s strong presence in the US and Unilever’s in presence Europe and Asia.

Unilever saw “no reason to discuss a deal without financial or strategic merit,” Reuters reported, noting that Kraft had until 17 March to make a final bid for UK-based Unilever under UK takeover regulations.

"We believe Kraft will likely need to raise its offer substantially if it hopes to change the outcome," Reuters reported citing a research note by RBC capital markets analyst David Palmer.

Analysts polled by WSJ and Reuters say that should the merger take place, Kraft will likely sell Unilever’s household business. However, they note that Kraft may look at the merger as a means to expand its overall business.

Unilever’s shares surged 15% after the announcement, closing slightly below Kraft’s offer of $50 per share. The news also helped boost shares in the consumer goods sector.