The FTSE UK indexes quarterly reshuffle was announced after the London market close on Wednesday – and was based on Tuesday’s closing prices – with the changes to come in effect at the start of trading on Monday 18 March.
Life insurance consolidator Phoenix Group Holdings PLC (LON:PHNX) also gained promotion to the FTSE 100 index from the FTSE 250 index, while going the other way will be merged betting group GVC Holdings PLC (LON:GVC) and oil services firm John Wood Group PLC (LON:WG.).
In reaction, Just Eat shares were 2.6% higher at 743.60p in late afternoon trading, while Phoenix Group shares were up 0.9% at 695.40p. Shares in GVC shed 2.1% at 655.50p, and Wood Group lost 3% at 522.80p.
Russ Mould, AJ Bell’s investment director commented: “Both life insurer Phoenix and online food order and delivery service provider Just Eat are going into the FTSE 100, thanks to their respective market valuations of £5.0bn and £4.9bn.
“That is enough to rank them 88th and 89th by market cap, just above the 91st place cut-off point and enough to merit automatic promotion.”
He pointed out: “This is Phoenix’s first flight into the FTSE 100, while it represents a rapid return for Just Eat, just three months after its demotion in December.”
Mould added: “We have already had two changes to the FTSE 100’s membership since the last reshuffle in December, thanks to successful bids for Randgold Resources and Shire, who were replaced by Auto Trader and Hikma, and the latest quarterly review brings further changes.”
Just Eat stormed into the FTSE 100 in the fourth quarter of 2017, within four years of its April 2014 flotation. however, anyone who tucked into the stock on the back of its promotion ended up with a bad case of indigestion as the shares peaked in January 2018, almost immediately after its entry to the index.
Mould pointed out that Just Eat’s share price slide began when then chief executive Peter Plumb announced a plan to invest £50mln in delivery services, subsequently stepped up to £55mln to £60mln.
Just Eat had previously positioned itself as an online platform for takeaway outlets who then took care of delivery themselves.
However there a better end to the year, when Just Eat announced in January that it would exceed sales expectations for 2018 and raised them for 2019, although that was somewhat overshadowed by CEO Plumb’s resignation.
Activist pressure on Just Eat
Mould noted that the company is still looking for a full-time boss at a time when it faces pressure from shareholder Cat Rock Capital.
The US activist investor is calling for a further overhaul of management and a merger with a rival platform to bolster its competitive position and Mould said it may be the prospect of further change at the firm that is supporting its share price and return to the FTSE 100.
The AJ Bell investment director pointed out that Phoenix Group, which had previously purchased assets from Axa and then Abbey Life from Deutsche Bank, has been propelled into the FTSE 100 after 2018’s £3.3bn acquisition of Standard Life Aberdeen PLC’s (LON:SLA) life assurance operations
This will be Phoenix’s first time in the FTSE 100, although in 2008 the company, then private and called Pearl, bought index member Resolution in a £5bn deal.