Microsoft has walked away from its bid to buyout Yahoo, after three months of negotiations.
The company had raised its initial bid by $5 billion (£2.5 billion), to $33 per share, but Yahoo said it wanted $37 per share.
Steve Ballmer, the chief executive officer of Microsoft, said: "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."
He added that the company thought the deal "made sense" for Microsoft and that it wanted to "provide greater choice and innovation in the marketplace" with the move.
Yahoo termed the offer as "a distraction" and said that it could now continue with its transition.
The deadline Microsoft placed on the offer, of three weeks, passed last Saturday and the industry was waiting for the company to make its next move.
However, industry experts have said the deal is not yet over, with Mark Mahaney, the Citigroup analyst said that Yahoo "missed a great opportunity".
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