UPS withdraws its $7 billion offer for Dutch parcels company TNT. Shares in TNT plummet by as much as 50%. The merger was heralded as a new age for European M&A, but companies are going to be more cautious now it has fallen through, says IG Market Analyst, Chris Beauchamp.

SHOWS: LONDON, ENGLAND, UK (REUTERS - ACCESS ALL) (JANUARY 14, 2012)

1. IG MARKET ANALYST, CHRIS BEAUCHAMP, SAYING:

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(QUESTION: Well then Chris, the obvious question is, what next for TNT?)
Well they really do find themselves in a bit of a hole at the moment. This merger with UPS was really the key plank of their strategy and now they find themselves bereft really of any particular reason for being a new plan needed I think to expand in other markets. But where they go from here is rather difficult to see at present.
(QUESTION: And what happens to the board? I mean to see your share price collapse by half in one day, they can't be sitting too pretty right now?)
Well I would think they would be probably feeling rather unaccountable this morning, to say the least. If they stake their reputations on this deal and now it's fallen through, they would have to come up with some pretty excellent explaining really to outline where they're going next.
(QUESTION: What does this mean mean, if you can take anything from it, for the broader M&A environment within Europe? I mean the EU Commission hasn't said anything yet, but do you think deals in the pipeline may be choked up on the back of this?)
I think certainly they might feel a bit of problems. This merger was widely seen as heralding a sort of new age for M&A in Europe and now this has been rather mocked as put on it. Companies going to be rather cautious I think looking ahead and any deals that might have been in the pipeline might now be blocked for the foreseeable future.
(QUESTION: And just to finish up, European stocks, they're on a tear. Eight months of gains, that's the best run since the FTSEurofirst was launched in 1997. When does Draghi's positive contagion turn into Greenspan's irrational exuberance?)
Well it does seem as if markets are in a mood to keep going up regardless of any worries. And certainly there doesn't need to be too much bad news at the moment. But as we've learned from crises over the last few years especially with the Eurozone, it does tend to creep up on you when you least expect it although we've had no bad news from Greece, Spain, Italy or any other usual offenders, it's quite possible that something will emerge at some point to surprise the market.
(QUESTION: And if so, are we looking at a 5%, 10% correction?)
I think we can look at a correction of at least 5% as possible really if something really major does appear. But that said, there doesn't seem much to stock markets at present.'