US-based Halliburton and Baker Hughes have abandoned their previously announced merger valued at $34.6bn, due to opposition from the US and European regulators.
The merger agreement was announced in November 2014 and terminated as it was hit with challenges in securing remaining regulatory approvals and general industry conditions.
Halliburton chairman and CEO Dave Lesar said: "While both companies expected the proposed merger to result in compelling benefits to shareholders, customers and other stakeholders, challenges in obtaining remaining regulatory approvals and general industry conditions that severely damaged deal economics led to the conclusion that termination is the best course of action.
"We are the execution company; our strategy, technologies and service quality are focused on helping customers maximise production at the lowest cost and driving industry leading growth, margins and returns."
Baker Hughes chairman and CEO Martin Craighead said: "This was an extremely complex, global transaction and, ultimately, a solution could not be found to satisfy the antitrust concerns of regulators, both in the United States and abroad."
In connection with the termination of the merger agreement, Halliburton will have to pay $3.5bn break-up fee to Baker Hughes.
On 6 April 2016, the Department of Justice filed suit to block the merger, alleging that the deal would unlawfully eliminate competition between the companies in at least 23 markets that are vital to the exploration and production of oil and natural gas in the US.
Prior to the lawsuit filing, Halliburton offered to sell certain assets to address the department’s competitive concerns.
Attorney General Loretta Lynch said: "The companies’ decision to abandon this transaction, which would have left many oilfield service markets in the hands of a duopoly, is a victory for the US economy and for all Americans."
Halliburton serves the upstream oil and gas industry and reported revenue of $23.6bn in 2015.
Baker Hughes supplies oilfield services, products, technology and systems to oil and natural gas industry globally. It operates in more than 80 countries and reported a $15.7bn revenue in 2015.
Image: America Tower in the American General Center in Houston, houses the headquarters of Baker Hughes. Photo: courtesy of WhisperToMe.
