Microsoft abandoned its plans to purchase Yahoo! on Saturday, after the two technology giants said they could not come to an agreement on price.

According to statements issued by both companies, Microsoft raised its bid at one point to $33 a share, but that still remained $4 a share below the minimum Yahoo! was willing to sell for. The $33 bid represented a 70% premium on the price of Yahoo!'s stock before Microsoft's bid was announced.

"Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo! has not moved toward accepting our offer," Microsoft's Steve Ballmer said in a Microsoft press release. "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."

With the bid now being off the table, Yahoo!'s stock is poised to fall on Monday. Yahoo! shares closed at $28.67.

The pulled bid comes as a surprising move for Microsoft, who had said previously that it would consider a hostile takeover of Yahoo! (YHOO) through a proxy contest if the company's executives did not approve the merger.

Instead, Microsoft's (MSFT) Steve Ballmer said that a hostile takeover would "would make Yahoo! undesirable as an acquisition for Microsoft."

Without a bid from Microsoft, Yahoo! now must find a way to placate both its employees and more importantly its shareholders.

Most major shareholders have said they were open to a $34-$35 a share price target on Yahoo!, but were fairly confident that Microsoft and Yahoo! could bridge that gap. 

But without the bid, shareholders will now turn their anger onto Yahoo!'s Jerry Yang and the company's Board of Directors. There is also the possibility of shareholder lawsuits against Yahoo! for being inflexible during merger talks.

However, while Microsoft has formally pulled its offer off the table, it does not mean that Microsoft is still open for a possible merger.

The Wall Street Journal said on Sunday that Microsoft could be using the rejection letter as a tactic to get shareholders on the company's side and further pressure Yahoo! into a deal, similar to what Oracle (ORCL) did in 2007 with BEA Systems.