Microsoft drops Yahoo bid

Updated 07.40 Sun May 04 2008

Keywords: Microsoft

Microsoft has withdrawn its offer for Yahoo as negotiations fell through on an acceptable sale price.

The software company had raised its original offer from $44.6bn to $47.5bn (£24.1bn) - $33 per share, according to chief executive Steve Ballmer.

Microsoft had wanted to do a deal to be able to compete with Google

But he added that Yahoo had insisted on at least $53bn, or $37 a share.

"Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo has not moved toward accepting our offer," Mr Ballmer said in a statement.

"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."

The software giant had wanted to do a deal to be able to compete with Google, which dominates the lucrative market for internet advertising.