Microsoft on Saturday withdrew its takeover offer for Yahoo as the internet company continued to reject the terms of the proposed deal, despite a higher offer worth $33 a share, or $46.5bn.

The apparent abandonment of the three-month takeover tussle came after Yahoo founders Jerry Yang and David Filo flew to Seattle earlier in the day for a last-ditch negotiating session with Steve Ballmer, Microsoft’s chief executive officer, and Kevin Johnson, who oversees its internet operations, according to a person close to the situation.