International Business Machines withdrew its offer to acquire Sun Microsystems, the NYT reports. Sources say Sun’s board balked at a reduced offer.

IBM which was reportedly in talks to buy Sun Microsystems in a deal that would expand its server market share for $7 Billion dollars.

According to the WSJ, people familiar with the situation said Sun’s board rejected a formal acquisition offer by IBM on Saturday, sending a notice terminating Sun’s agreement to negotiate exclusively with IBM.