Investors wean themselves off Merlin’s spell
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Leisure group Merlin Entertainments, which includes Alton Towers, Legoland and Sea Life Centres among its global portfolio, is set to crash out of the FTSE 100 this week.
It is the result of poor trading performance leading to weakening investor confidence.
Last month its chief executive Nick Varney warned it had “experienced unprecedented levels of demand volatility in recent periods”.
Merlin’s share price reached an all-time high in June, of 537p.
However it slipped throughout the summer before plunging 16% when it blamed terrorism and bad weather for poor trading. Only a strong performance by its Legoland parks had kept its like-for-like growth positive.
Friday’s closing price of 362p represents a 33% fall from its summer peak, in a period when the FTSE 100 is down just 2%.
The share price values Merlin at £3.7bn – putting it 120th in the list of most valuable companies on the FTSE.
The companies in the FTSE 100 are subject to quarterly reviews. To earn promotion, companies that are outside the FTSE 100 must have a value that places them in the top 90 companies.
DS Smith and Just Eat are FTSE 250 companies which were ranked 82nd and 86th respectively, based on Friday’s closing share prices.
That would see the two lowest-ranked FTSE 100 companies relegated, which would be Babcock International and Merlin on current values.
Analysts have previously highlighted Merlin’s high trading price – around 21 times forward earnings compared to a 15 times multiple for the FTSE 100 as a whole.