Food-ordering app Just Eat is set to be promoted to the FTSE 100 three years after its stock market debut, while defence contractor Babcock and Merlin Entertainments, which owns UK theme parks including Alton Towers and Legoland, are among the companies facing relegation.
Just Eat’s market value has more than tripled since it floated in April 2014 as online food ordering has surged across the UK.
Its shares were priced at 260p at the time of issuance but this month hit an all-time high when the company received approval from the UK’s competition watchdog for its £240 million takeover of smaller competitor Hungryhouse.
It is now trading around 819p, up about 40 per cent in the year to date, to give a market capitalisation of £5.6 billion.
The company has "benefited from a change in consumer habits," said Ben Thomas, analyst at Investec Wealth & Investment. He also noted the impact of the group's "long history of small, bolt-on acquisitions since its IPO".
Investors believe the Hungryhouse deal, which is expected to complete in January, will help Just Eat to compete with newer rivals such UberEats and Deliveroo.
If promoted, Just Eat would be the "first consumer-facing tech business to reach the FTSE 100," said Nicholas Hyett, equity analyst at Hargreaves Lansdown.
Reshuffle
By contrast, Babcock International and Merlin Entertainment could both be demoted to the FTSE 250 based on their recent market capitalisations.
The quarterly reshuffle will be assessed this Tuesday, with any changes coming into force from mid-December.
Babcock, one of Britain’s oldest engineering groups, has struggled to shake off concern that Brexit will reduce defence spending. It has also been damaged by troubles elsewhere in the outsourcing industry, including operational problems and the historic mispricing of contracts.
Babcock have been found “guilty by association”, said Mr Thomas.
Its shares are down 19 per cent compared with a month ago to give a market capitalisation of £3.4 billion.
Merlin’s shares dropped sharply in October after the group downgraded its full-year profit expectations, citing “difficult” summer trading due to bad weather and a spate of UK terror attacks.
Hospital group Mediclinic International, which recently ended takeover talks with Spire Healthcare after the two failed to agree on a price, is also likely to be evicted from the FTSE 100.
Both paper packaging business DS Smith and Halma, the health and safety sensor maker, are set to move up into the FTSE 100, boosted by acquisitions and organic growth.
– Copyright The Financial Times Limited 2017
