Despite reports on Friday that Yahoo! had been brought to the bargaining table by a higher Microsoft offer, Microsoft issued a press release on Saturday indicating it was walking away from the deal.
“Despite our best efforts, including raising our bid by roughly $5
billion, Yahoo! has not moved toward accepting our offer. 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,” said Ballmer.
Additionally, Microsoft decided a proxy fight was not worth it, citing the following:
"We regard with particular concern your apparent planning to respond to a “hostile” bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo! today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us for a number of reasons ..."