By Samuel Indyk
Investing.com – The quarterly FTSE reshuffle is just around the corner, with an announcement due on Wednesday, 1st September based on the closing prices from the 31st August. Changes come into effect after the close on Friday 17th September.
To break into the FTSE 100, potential joiners have to be in top 90 companies by market capitalisation. To be demoted to the FTSE 250, existing constituents have to drop outside the top 110 by market cap.
FTSE 100 reshuffle
Based on current prices, Morrisons (LON:MRW) would get a promotion to the FTSE 100. The supermarket chain has been the subject of a bidding war from US private equity which has seen no signs of slowing down.
On Thursday, the Bradford-based company agreed to be taken over by Clayton, Dubilier & Rice in a deal worth £7 billion, dropping its previous recommendation for an offer from a consortium led by Fortress Investment Group. Fortress said they were considering their options.
The takeover saga has helped push shares higher by over 60% year-to-date and has boosted chances of being added to the FTSE 100.
Meggitt (LON:MGGT) looks set to join Morrisons in getting promoted to the blue-chip index. The aerospace and defence company has also been the subject of two takeover approaches from US-based companies Parker-Hannifin (NYSE:PH) and Transdigm (NYSE:TDG).
“Morrisons looks to be heading back to the FTSE 100, fuelled by bid speculation from hungry firms wanting a slice of the UK supermarket pie,” said Hargreaves Lansdown (LON:HRGV) Equity Analyst Nicholas Hyett in an emailed note.
“Meggitt too is a beneficiary of overseas appetite for UK listed companies, driving it up to the brink of FTSE 100 status.”
On the opposite end of the scale, ITV (LON:ITV) looks set to lose its status in the FTSE 100 and be demoted to the midcap FTSE 250, alongside engineering firm Weir Group (LON:WEIR).
“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,” Hyett added.
“Engineering firm Weir Group is also on the brink after only being promoted earlier in the year.”
Cybersecurity firm Darktrace (LON:DARK) only listed its shares on the London Stock Exchange in April but looks set to join the FTSE 250 following a strong performance in its shares since the IPO.