Morrisons to leave FTSE 100 with share price near 12-year low

MORRISONS’ demotion from the FTSE 100 will be confirmed tomorrow, ending a 14-year run among the stock market’s index of largest companies.

The supermarket group will be replaced by another Bradford company, financial services provider Provident Financial, following the quarterly review that formally takes place tomorrow.

Companies’ market capitalisation value at the close of trading today is the factor used to determine which are included in the FTSE 100 and FTSE 250 indices. To earn promotion, companies that are outside the FTSE 100 must have a value that places them in the top 90 companies.

Three companies will be promoted – Worldpay, which was the subject of the largest float of the year in October and has already seen its value rise by £1bn, to £5.95bn, was ranked 69th at tonight’s close, with Irish distribution company DCC 81st and Provident Financial 82nd.

That means Morrisons, which tonight is valued at £3.58bn and ranked as the 111th most valuable company on the market, will be demoted, along with security firm G4S and engineering group Meggitt.

Morrisons went public in 1967 – before it even had any stores in Lancashire – and entered the FTSE 100 in April 2001, but it will be tough-going for it to re-enter the FTSE 100 soon. Based on today’s closing prices, while the retailer would have required only a 7% improvement in its share price to have stayed in, it would have needed to be 26% higher to have qualified for promotion as an outsider.

Morrisons share price fell steadily during the final 15 months of former chief executive Dalton Philips’ reign and, despite initially rallying when David Potts was chosen to replace him at the start of this year, its shares have struggled recently. They are now worth just half what they were in September 2013 and are hovering just above a 12-year low.

Morrisons share price, November 2012 – November 2015:

As well as a being a blow to its prestige, leaving the FTSE 100 will mean some tracker funds held by institutional investors will look to sell their stock.

Provident Financial has doubled its share price since February 2014, and has increased by around one-quarter in the last three months alone. The finance group, whose brands include Vanquis Bank, Satsuma, glo and Moneybarn, is now valued at £5.33bn.

Morrisons has slipped from Yorkshire’s most-valuable listed business in January to fourth. Housebuilder Persimmon overtook it in February, followed by Provident Financial in May and Croda International in August.

The FTSE committee meets tomorrow to finalise the changes, which will be effective from the start of trading on December 21.

Yorkshire’s largest listed businesses, by market cap:

Persimmon, £5,830m
Provident, £5,330m
Croda International, £3,770m
Morrisons, £3,580m
Pace, £1,270m*
Card Factory, £1,230m
Drax, £1,070m
Cranswick, £850m
SIG, £800m
DFS, £740m

* Pace is currently the subject of a takeover, which was announced in April and has not yet completed