Mega-deals are apparently set to collapse this year, after the well-know intervention by the US government in the merger between Pfizer and Allergan. The US government prevented the merger which would see the pharmaceutical giant’s headquarters based in Ireland, meaning they would be governed by different rules regarding tax. Only 4 weeks after the deal fell apart, the energy group Halliburton, the second corporation in the international oil service industry after Schlumberger, and Baker Hughes, a smaller Texan rival, are also set to become susceptible to public intervention. The companies announced their plan to merge in November 2014 in a bid to better compete against industry leaders, shortly after oil prices began to fall. It was considered by US authorities and as well as European regulators that an agreement between the two companies would affect the competition rates and would affect consumer’s choice range.
Actually, what led to the termination of the deal were the challenges in obtaining the remaining regulatory approvals and general industry conditions. Halliburton and Baker Hughes have called off a $35 billion deal after the U.S. Justice Department filed a lawsuit to stop the acquisition. In connection with the terms of the negotiation talks, Halliburton is required to pay Baker Hughes a termination fee of $3.5 billion by Wednesday. Shares of Halliburton and Baker Hughes have declined which does not bode well given the worsening state of the oil industry.