Halliburton won’t merge with Baker Hughes

Halliburton and Baker Hughes will not merge

Halliburton has canceled its mega-merger with Baker Hughes.

The second and third-largest companies in the oil and gas industry announced on Sunday that they have decided to walk away from the deal they reached in November 2014.

Baker Hughes originally agreed to be acquired by Halliburton for $34.6 billion.

“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,” said Halliburton CEO Dave Lesar in a statement.

“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,” Martin Craighead, CEO of Baker Hughes, said

Regulator approval was a known major hurdle at the time the deal was announced.¬†Halliburton said it hired “the best antitrust counsel available” to help navigate what was sure to be heavy pullback from the deal.

The US Justice Department filed to block the merge on April 6, months after the European Commission had begun its own investigation into the merger.

In the US regulators said the merger would “eliminate vital competition, skew energy markets and harm American consumers.”

Attorney General Loretta E. Lynch estimated that the combined companies would control as much as 90% of US sales.

The Justice Department “has reached the wrong conclusion in its assessment of the transaction and that its action is counterproductive, especially in the context of the challenges the U.S. and global energy industry are facing,” the companies said in a joint statement.

Halliburton believed the merger would cut $2 billion in yearly costs.