Microsoft has decided to withdraw its offer for Yahoo and not pursue a hostile takeover bid, according to a letter from Microsoft CEO Steve Ballmer, just released: “Clearly a deal is not to be.” This marks an amazing turn in the MicroHoo drama. When the acquisition bid was first announced in February, it was discussed by Microsoft’s executives as though concluding the deal was only a matter of formality.

It’s not entirely clear if this marks the end of the whole episode but it certainly appears to (at least on the surface.) A skeptic might see this as a power play to deflate Yahoo’s stock and then come back with a tender offer or another try to buy the company in a weakened state.

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