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 US and global energy industry are facing”, the companies said in a joint statement.
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The contract governing Halliburton’s acquisition of Baker Hughes, which was valued at $35B when first announced in November 2014, expired on Saturday without an agreement by the companies to extend it.
The companies had set a deadline for the end of April to complete the deal or walk away.
Halliburton will pay Baker Hughes a termination fee of $3.5 billion by Wednesday, according to the statement.
The demise of the merger could not be independently confirmed Sunday night.
The collapse of Halliburton’s acquisition of Baker Hughes comes as both companies struggle to cope with the impact of lower energy prices on their clients. Halliburton’s first-quarter revenue fell 17% to $4.2 billion, compared with the same period a year earlier.
The glut slowed demand for drilling services and crushed the stock price of both companies.
Shares of Halliburton and Baker Hughes have declined amid the worst oil slump in a generation, reducing the deal’s value from $34.6bn when it was announced.
Halliburton and Baker Hughes had called their deal “pro-competitive” after it came under attack from the Justice Department, noting that Halliburton had offered to sell off billions of dollar in assets.
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The department said in the lawsuit that a Halliburton-Baker Hughes merger “threatens to substantially lessen competition in numerous markets”.
