FTSE Russell, in its latest review of the constituents of its indices, has now decided Just Eat is a company from the Netherlands rather than the UK, which makes it ineligible for the FTSE UK indices. Dechra Pharmaceuticals PLC (LSE:DPH), the veterinary drugs company, is set to take its place.
As our market reporter Nick Fletcher observed, Just Eat shares do not seem to mind and are up 0.66%.
UK nationality or not, the company has just announced it will create 1,500 jobs in Sunderland.
Just Eat is not the only curious situation in the FTSE reshuffle.
As noted by Richard Hunter, the head of markets at interactive investor, two companies set to be elevated to the FTSE 100 are likely to have short tenures in the top-shares index.
“William Morrison Supermarkets and Meggitt have both seen their share prices soar due to takeover situations and at current prices would both be promoted. Morrisons have been the subject of a bidding war which has seen its price rise by 62% over the last three months, with private equity firm Clayton, Dubilier & Rice in pole position to win the race for Morrisons and therefore see the shares delisted. Similarly, aerospace company Meggitt shares have risen by 71% over the last three months after approaches from both Parker-Hannifin and TransDigm Group. Whichever company ends up with control of Meggitt would result in the shares being removed from the premier index,” Hunter said.
Somewhere, a US private equity company is probably preparing a bid for the entire FTSE 100. “I tell you what, buddy, I’ll take the whole lot off your hands for one trillion of your English pounds.”
“At current share prices, the two stocks making way for Morrisons and Meggitt would be ITV and Weir Group (LSE:WEIR). ITV shares have dropped by 11% over the last three months and removal from the index would follow a previous relegation in September 2020, followed by promotion back into the index in June. Engineer Weir Group (LSE:WEIR) has also suffered a dip of 11% over the last three months and relegation would also represent a short stay in the premier index, having been promoted in March,” Hunter observed.
“Love Island may be back but broadcaster ITV looks likely to be dumped from the 100 after a short fling, despite the boost of Euros ad spend. Engineering firm Weir Group is also on the brink after only being promoted earlier in the year. With the permanent shift of many consumer businesses to digital, cyber security firm Darktrace is on track to unlock the doors into the FTSE 250,” Hyett noted.
We’ll find out for sure what the revised index constituents lists are on Wednesday, 1 September based on the closing prices on the day before.
It’s not just a case of looking at the top 100 companies by market capitalisation, however; potential joiners have to number in the top 90 to ensure a spot and existing constituents have to drop outside the top 110 to guarantee demotion.