New York: Software giant Microsoft said it has withdrawn its offer for Yahoo after its higher offer failed to move the internet company.

The collapse of talks between the companies ended Microsoft's hopes of buying the web portal to stiffen its competition with Google for internet advertising and software.

Microsoft had raised its bid for Yahoo to $44.6 billion, or $33 per share, as negotiations between the firms intensified over the weekend, but the increase had failed to win over Yahoo executives who had insisted on a higher price of $37 per share.

"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," Microsoft chief executive Steve Ballmer said in a statement Saturday.

In a letter to Yahoo chief executive Jerry Yang, Ballmer stressed that he believed a merger "would have created real value for our respective shareholders and would have provided consumers, publishers and advertisers with greater innovation and choice in the marketplace."

However, Microsoft was not willing to increase its bid by a further $5 billion to meet Yahoo's demand.