Microsoft today announced that it has officially withdrawn its proposal to acquire Yahoo. Ballmer has also published his letter to Yahoo's boss Jerry Yang:

"I appreciate the time and attention all of you have given to this matter, and I especially appreciate the time that you have invested personally. I feel that our discussions this week have been particularly useful, providing me for the first time with real clarity on what is and is not possible," Ballmer told Yang.

The letter also discloses that behind the scene negotiations asked Microsoft to pay at least $37 per share, while Microsoft only wanted to pay as much as $33 per share. The initial offer was $31 per share, a 62 percent premium at that time of the offer.

Ballmer's letter also reveals that Yahoo made it clear that it will defend itself in the case of a hostile takeover, which would have made the acquisition costly and undesirable for Microsoft. The top defensive measure which deterred Microsoft would have been the previously rumored deal with Google.

"In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us," Microsoft's boss said to Yang.

"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 so that we can maximize our potential to the benefit of our shareholders, employees, partners and users," Yang said after Microsoft's announcement.

After months of failed negotiations, Microsoft gave Yahoo an ultimatum in an April 5 letter, stating that if the two companies will not begin a negotiation on a definitive agreement within three weeks, they will take the case directly to the shareholders and start a proxy contest to elect a slate of directors for Yahoo board.

The initial offer made by Microsoft on February 1 was $31 a share, adding up to a grand total of approximately $44.6 billion, but after a downfall in Microsoft’s shares, was worth about $42 billion. The sum would have still made it, if finalized, the biggest-ever takeover in the high-tech industry. However, Yahoo’s board clearly said that it would not consider any offer lower than 40 dollars per share, which it considered to be a fair price. During last moment negotiations, Yahoo lowered the bar to $37, still too much for Microsoft.