Microsoft withdraws Yahoo bid, rebuffs higher price

Microsoft withdrew its €27.3 billion (US$42.3 billion) bid to buy Yahoo, scrapping an attempt to snap up the tarnished internet icon, an Associated Press report said.

The decision to walk away from the deal came after last-ditch efforts to negotiate a mutually acceptable sale price proved unsuccessful, the report added.

The talks reached a breaking point after Jerry Yang and David Filo, the co-founders of Sunnyvale-based Yahoo, flew to Seattle to meet personally with Microsoft CEO Steve Ballmer and Kevin Johnson, who runs the software maker's unprofitable online services division, according to someone familiar with the talks.

The Associated Press report said the person was not authorized to speak publicly and asked not to be identified.

Microsoft was willing to pay €30.7 billion (US$47.5 billion), according to Ballmer's letter.

But Yahoo's board demanded at least €34.3 billion (US$53 billion) according to Ballmer. That would have been nearly double Yahoo's stock price at the time Microsoft first made its bid a little over three months ago.

And Yang, who became Yahoo's CEO 11 months ago, wanted a higher price per share in a meeting, according to the person familiar with the discussions.

That meeting was held the day after Yang and Yahoo chairman Roy Bostock called to ask Microsoft not to withdraw its bid, the person said.

In a statement, Bostock reiterated that Microsoft had undervalued his company's assets since the takeover tug-of-war began more than three months ago.

But Yahoo hasn't necessarily faded from Microsoft's cross hairs.

The software maker conceivably could renew its bid later this year if Yahoo can't bounce back from more than two years of financial lethargy.