Merck & Co. and Sanofi-Aventis have abandoned their deal to combine their animal-health businesses due to regulatory snags, according to reports.

“The companies are discontinuing their agreement primarily because of the increasing complexity of implementing the proposed transaction, both in terms of the nature and extent of the anticipated divestitures and the length of time necessary for the worldwide regulatory review process,” said Merck and Sanofi in a joint statement. Back in October 2010, the companies had hired Morgan Stanley to arrange the sale of assets valued at $1 billion to resolve antitrust concerns. The merger would have created the world's biggest maker of medicines for livestock and pets, as Merck's Intervet and Sanofi's Merial had combined sales of $5.5 billion in 2010.

The two companies will now keep the Intervet and Merial units separate at no penalty to either side.