The Manchester United manager has long coveted the Germany captain as the man to fill the boots of Keane, 34, and it appears Bayern have finally lost patience with Ballack's stalling - they are "immediately looking for a replacement".
The player's current deal runs out at the end of the season, and he can talk to clubs outside Germany from January. The Bundesliga champions may decide to sell Ballack during the winter transfer window, for which Ferguson has been promised funds.
"We have officially withdrawn our offer," the Bayern chairman Karl-Heinz Rummenigge said, adding that the club met with Ballack, 29, who claimed not to have reached a decision about his future. "[That] does not necessarily mean Michael will leave us, but I say point-blank that we will immediately sound out the market for a replacement," Rummenigge added.
Ferguson faces competition from Europe's top clubs, including Real Madrid, Barcelona, Milan and Juventus.
Ballack has won two Bundesliga titles and two German Cups with Bayern Munich, but has repeatedly said his major ambition is to win the Champions' League.Reuse content