Handling this conflict is not interference; it's the manager's job. A manager is responsible for output and productivity of her team.  Any energy that team members invest without productive resolutions takes away from their ability to do their job.  A manager must take assertive action to resolve the conflict before it escalates into more serious emotional damage. 

In this case, the manager may start by sitting down with each team member separately.  Ask for a brief explanation of the nature of the conflict, but resist prolonged attempts of rehashing the past. Tell them that their unresolved conflict is impeding the group's work.  Stress that you expect each to be responsible for 51% of the relationship.  That means putting more into it than each may be getting back in return. Your only concern needs to be with their future relationship.  Make clear that you don't expect your department heads to like each other, but you do expect them to work with each other and resolve differences, regardless of their likes or dislikes. You may also meet with the two parties together, find the root cause of their differences, and then ask for mutually agreeable solutions.  Gain input and solutions from both sides in a mediated session.

Also let them know what will happen if the unresolved conflict continues. Spell out the specific consequences, including termination if necessary. After this discussion, show that you are intolerant of any repetition of the problems. At the first sight of a new outbreak, take the two of them aside and implement the take appropriate next step towards termination. You may lose talented individuals, but you'll lose far more in the long run if it’s allowed to continue.  Unresolved or unmanaged conflict is contagious. What conflict strategies did the manager use? (At first Accommodating, then Collaborating [looking for root causes and solutions], to Competing--decisive action with termination.)

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