“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 chairman and chief executive Dave Lesar in a statement.

Martin Craighead, his counterpart at Baker Hughes, echoed those comments.

“(The) outcome is disappointing because of our strong belief in the vast potential of the business combination to deliver benefits for shareholders, customers and both companies’ employees,” said Craighead.  

“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.”

Halliburton, the second-largest oilfield services provider, will pay Baker Hughes, the third-largest provider, the merger termination fee of US$3.5 billion by Wednesday.

Baker Hughes said it will use the money to buy back US$1.5 billion worth of shares and debt totaling US$1 billion. The company also said it will now move to cut US$500 million in costs.

The fee is the largest cash breakup fee ever, reported Reuters Breakingviews columnist Kevin Allison. And, he wrote, it is worth more than Halliburton’s expected net profits over the next three years.

With the deal off, some analysts are now looking for other companies to announce merges and acquisitions as a way to cope with the persistently low prices, USA Today reported.

"The initial thought was that divestitures from the deal would shape the profile of the industry with many players waiting to see how the process would shake out," Deutsche Bank analyst Mike Urban wrote in a note to investors, according to USA Today.  

"With the deal now called off, we believe it could set off a wave of industry restructuring/consolidation."