What's going on?

Halliburton and Baker Hughes, two massive American oil field services companies, announced on Monday that they would not be merging because of the likelihood that various governments would try to block the deal.

What does this mean?

�Oil field services� companies provide things like drilling equipment, seismic data and other infrastructure necessary to companies that drill oil. Halliburton and Baker Hughes are the second and third largest oil field services firms in the world, respectively, and, back in 2014, they agreed to merge with each other in a deal that was worth $35 billion. However, the deal was always going to face pushback from governments concerned that it would do too much to harm competition in the industry. A month ago, the US government sued to block the deal and it appears the companies have decided to walk away instead of fight the battle in court (other jurisdictions, like Europe, were also likely to kick up a fuss).

Why should I care?

The bigger picture: Announced deals can, and do, fall apart. We report on mergers and acquisitions (M&A) all the time, but it�s important to remember that not every announced deal becomes a done deal. In fact, recent actions by the US government to block deals (whether from a competition standpoint, like this one, or a tax standpoint, like the Pfizer/Allergan deal) might be a factor that further dampens M&A this year.

For the stocks: This isn�t necessarily bad news for the companies. By not joining, the two companies will have more flexibility to cut costs immediately (the deal had placed restrictions on the companies making many changes before the merger was completed). That should help them keep cash in the bank so that they are able to spend it wisely if oil production starts increasing again.