US oil service giants Halliburton and Baker Hughes have ended a proposed multi-billion dollar merger, announced in November 2014, after facing stiff resistance fromUS and European regulators and plunging oil prices.

The proposed US$28 billion takeover by Halliburton of Baker Hughes would have created a behemoth oil service company that could rival the global leader Schlumberger.The deal has faced opposition from the start as regulators felt that the mega merger would reduce competition and lead to higher prices that would ultimately hurtconsumers.

Dave Lesar, Chairman and Chief Executive Officer of Halliburton said in a joint statement: "While both companies expected the proposed merger to result in compellingbenefits to shareholders, customers and other stakeholders, challenges in obtaining remaining regulatory approvals and general industry conditions that severelydamaged deal economics led to the conclusion that termination is the best course of action."

As part of the deal falling through Halliburton will be required to pay Baker Hughes a termination fee of US$3.5 billion"This was an extremely complex, global transaction and, ultimately, a solution could not be found to satisfy the antitrust concerns of regulators, both in theUnited States and abroad," said Martin Craighead, Chairman and Chief Executive Officer of Baker Hughes.

Last month the US Department of Justice filed a lawsuit to stop the merger, saying it would leave only two dominant suppliers in the well drilling and oilconstruction services industry.

The continued low oil price has played its part as well and the downturn has changed the financial attractiveness of the deal. Last week, Baker Hughes reporteda bigger-than-expected first-quarter loss. Last month, Halliburton announced 6,000 job cuts.