IBTimes UK

Oil major Halliburton called off its $28 billion merger deal with Baker Hughes after the companies faced stiff opposition from the US and European antitrust authorities.

"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," Dave Lesar, chief executive of Halliburton, said, according to Reuters.

There were concerns that the merger of two of the largest oilfield services providers would have created a monopoly that would result in higher prices in the sector.

Halliburton and Baker Hughes had entered into a contract in November 2014 under which the larger rival made a cash-and-stock offer valued at $34.6 billion for Baker Hughes. The offer is now worth about $28 billion.

As the deal came to naught, Halliburton will have to pay Baker Hughes a $3.5 billion breakup fee.

The US Justice Department, which filed a lawsuit last month to stop the merger, said in a statement the development was a victory for the Americans.

"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 U.S. economy and for all Americans," US Attorney General Loretta Lynch said in a statement.

The unraveling of the deal is a blow to both the companies. Baker Hughes reported a bigger-than-expected first-quarter loss last week while Halliburton cut more than 6,000 jobs last month.

Halliburton's first quarter revenue dropped 40.4 percent as it also took a $2.1 billion restructuring charge in the quarter.