Unilever forced Kraft Heinz to abandon its £115bn bid for the company after the Anglo-Dutch maker of Marmite and Flora said it would use every tool at its disposal to fend off a deal.

The US consumer goods firm behind Philadelphia and WeightWatchers withdrew its offer “amicably” on Sunday evening, just 48 hours after admitting interest in its much larger rival.

The rapid volte face saw Unilever’s shares fall by nearly 8% on Monday – their worst one-day performance since 2008 – after soaring by 13% on Friday to a record high when the firm revealed it had knocked back an initial approach.

Well-placed sources said Kraft Heinz’s key investors – investment guru Warren Buffett and private equity tycoon Jorge Lemann – were forced into a chastening retreat after Unilever made clear the company stood no chance of sealing the second-largest corporate deal in history.

Unilever, led by Dutch chief executive Paul Polman, is understood to have warned the duo over the weekend that there was no appetite for the offer at boardroom level and that investors were highly unlikely to be swayed.

One well-placed source said Unilever had gone “on the offensive”, catching Kraft Heinz unawares and forcing the company to “wave the white flag”.

“It became clear [to Kraft Heinz] that there was very little chance the deal would ever happen,” the source said.

Kraft Heinz’s position was further weakened by the fact that rumours of the deal leaked before the US company was ready. This meant Kraft did not have the time to woo key investors before going public with its interest.

Unilever shareholders, 70% of whom are long-term investors who have held their shares for more than seven years, are also thought to have been sceptical about the benefits of the proposal.

Kraft’s offer was made partly in shares but mostly in cash, about £70bn, a sum that would have been funded by debt. This heavily-leveraged business model would have dragged down Unilever’s credit rating, leaving the combined company laden with a huge debt pile incurring substantial repayment costs.

“Shareholders were effectively being offered a deal funded by their own money,” said one source familiar with the situation.

Such a swift withdrawal is unheard of for Lemann and Buffett, neither of whom are accustomed to tasting defeat in a major bid battle. Lemann’s Brazilian buyout house 3G was instrumental in securing brewer ABInBev’s takeover of SABMiller, while Buffett – often dubbed the Sage of Omaha for his deal-making prowess – was among the masterminds behind Kraft’s merger with Heinz in 2015.

While business minister Greg Clark spoke to Unilever and Kraft on Friday, government sources played down reports that Kraft was put off by the threat of intervention from government.

But Kraft Heinz will have been aware of Theresa May’s scepticism over foreign takeovers, including the controversial takeover of Cadbury by Kraft in 2010 when it reneged on commitments to save jobs. That deal prompted a change in the takeover code that provided for commitments made during the acquisition process to be made legally binding.

That would have left Kraft, whose backers are famed for tough cost-cutting, facing pressure to safeguard the combined firm’s 9,000 UK jobs, including Unilever’s London office and several production facilities.

Earlier this year Japan’s Softbank became the first overseas buyer to be affected by the new provisions, as part of its £24bn takeover of chip designer ARM Holdings. The Japanese firm promised to keep ARM’s headquarters in the UK and double its UK headcount over the course of five years.