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Budget airline easyJet is expected to return to the FTSE 100 in this week’s index reshuffle after its shares were boosted by a recommended £5.7 billion takeover offer from the American private equity firm Apollo Capital Management.
As things stand, the airline would be joined in the top flight by Ithaca Energy, the North Sea oil and gas producer, while the gambling group Entain and the housebuilder Persimmon face relegation to the FTSE 250. Aston Martin Lagonda, the lossmaking carmaker, is set to fall out of the FTSE 250 altogether and drop into the FTSE SmallCap index.
The changes are not yet official. Index provider FTSE Russell’s indicative review is based on market data from 21 August, and the review proper will be conducted using prices at the close of trading on 1 September. The confirmed changes will be announced after the market closes on 2 September.
Under FTSE Russell’s ground rules for its UK index series, most recently updated in July, a company is removed from the FTSE 100 at the quarterly review if it has fallen to 111th place or below when companies are ranked by full market capitalisation.
Takeover bid powers easyJet’s return
For easyJet, promotion would mark a return to an index it has been in and out of over the years, and it comes despite issues with price-sensitive customers over the summer and heavy losses last winter.
Quite how long the airline stays in the premier index is another matter. That will depend on how long the regulatory investigation into the Apollo deal takes, and on whether Brussels is prepared to wave through the new ownership structure.
Ithaca Energy’s market value has climbed to about £4.5 billion, helped by strong financial results and higher oil and gas prices. The British oil and gas company’s shares have risen about 64 per cent this year, with investors also attracted by its growth pipeline.
Gambling tax rise and budget nerves take their toll
At the other end of the table, Entain has fallen about 30 per cent this year. The owner of Ladbrokes and Coral has been hit by the rise in UK remote gaming duty from 21 per cent to 40 per cent, which applies to accounting periods beginning on or after 1 April this year.
Persimmon is also expected to leave the FTSE 100 after its shares fell about 13 per cent this year. The housebuilder is contending with weak housing activity, concerns over mortgage affordability, uncertainty in the run up to the October budget and higher costs, including national insurance and stamp duty.
Aston Martin heads the other way
Aston Martin’s relegation from the FTSE 250 is the latest setback for the carmaker, which announced plans to cut about 600 jobs, around a fifth of its workforce, earlier this year after net losses widened by 52 per cent to £493.2 million.
Two companies are on course to take places in the mid-cap index in its wake. Pinewood Technologies Group, the automotive technology company that is itself the subject of a takeover offer, and Volex, Lord Rothschild’s electrical manufacturing company, are both set for promotion to the FTSE 250.
