Software giant Microsoft has walked away from its bid to buy Yahoo, saying the latest asking price of US$53 billion, or $37 per share, is too high.
The decision came after Saturday morning talks between Microsoft chief executive officer Steve Ballmer and Yahoo chief executive officer and co-founder Jerry Yang.
"Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo! has not moved toward accepting our offer," Ballmer said in a statement late Saturday.
"After careful consideration, we believe the economics demanded by Yahoo! do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal."
Microsoft had first offered $44.6 billion, or $31 per share. After Yahoo refused, Microsoft had raised its bid to $47.5 billion, which would have worked out to $33 per share.
In a letter to Yang released by Microsoft late Saturday, Ballmer said further discussions would not have produced an acceptable price.
"It is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders," Ballmer wrote. "This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo! undesirable as an acquisition for Microsoft."
Yang later responded by saying his company's shareholders felt Microsoft's last bid was too low.
"With the distraction of Microsoft's unsolicited proposal now behind us, we will be able to focus all of our energies on executing the most important transition in our history," he said in a statement.
The two companies had been trying to agree on an acceptable price for the past three months. Ballmer said Microsoft would continue to strive toward its plans for Internet services -- without the potential help of Yahoo.
"We have a talented team in place and a compelling plan to grow our business through innovative new services and strategic transactions with other business partners," he said. "While Yahoo! would have accelerated our strategy, I am confident that we can continue to move forward toward our goals."
