The companies announced the decision today in a joint press release.
Unilever, which has a head office in London, earlier had spurned the offer, saying the price was too low.
Despite rejection, ketchup, cheese and lunch meat maker Kraft Heinz said last week it was still interested in the deal.
Analysts say Kraft Heinz, co-headquartered in Chicago and Pittsburgh, is still in the market for acquisitions.
The deal would have brought together Kraft Heinz brands such as Oscar Mayer, Jell-O and Velveeta and Unilever's Hellman's, Lipton and Knorr. The combined company would have rivaled Nestle as the world's biggest packaged food maker by sales.
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