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Halliburton, Baker Hughes terminate merger deal

and terminatedtheir proposed merger.

Halliburtonwill pay $3.5 billion as termination fee to Baker Hughes by May 4.

Thedeal termination,anticipated byanalysts and announced by the companies May 1, resulted from challenges inobtaining remaining regulatory approvals and general industry conditions that,according to Halliburton Chairman and CEO Dave Lesar, "severely damageddeal economics."

Thecompanies had until April 30 to obtain antitrust approvals for their agreement,which would have combined the world's second- and third-largest oil fieldservices firms, according to a recent report from Bloomberg News. At the time ofthe deal announcement, it was valued at $34.6 billion.

Thechallenges include an antitrust lawsuitby the U.S. Department of Justice that aimed to stop Halliburton's acquisitionof Baker Hughes on fears that a deal could eliminate competition, raise pricesand reduce innovation in the oilfield services industry.

"Thiswas an extremely complex, global transaction and, ultimately, a solution couldnot be found to satisfy the antitrust concerns of regulators, both in the U.S.and abroad," Baker Hughes Chairman and CEO Martin Craighead said.

Halliburtonwill discuss the termination of the agreement at its scheduled May 3 conferencecall.