Freeserve, the UK's leading internet service provider, yesterday fell below its listing price for the first time in almost a year, increasing the possibility it will be relegated from theFTSE 100 next Monday.
Freeserve, the UK's leading internet service provider, yesterday fell below its listing price for the first time in almost a year, increasing the possibility it will be relegated from theFTSE 100 next Monday.
Funds tracking the blue chip index pushed Freeserve shares as low as 146p at one point, below its listing price of 150p. They closed 11.5 per cent down at 160p. The last time it fell below 150p was 2 November 1999.
Freeserve has the FTSE 100's lowest market capitalisation, at £1.6bn, and the demerger into two companies of both P&O and BG means there will be 102 companies eligible for the FTSE 100 at the close of trade today. The two companies with the lowest market value will be pushed out of the index next Monday. "The more Freeserve goes down, the higher the risk it's going to get dumped", and so people continue to sell, said Gerard van Hamel Platerink, an analyst at Schroder Salomon Smith Barney.
Shares in Freeserve, which has about 2.3 million customers, have slumped 83 per cent from a high of 977.5p reached on 10 March. The company has suffered from a series of failed merger talks with its German rival T-Online, a decline in internet-related shares, and questions over the future of its business model. The share-price fall will continue because "on any basis Freeserve continues to be expensive relative to peers", said Mr van Hamel Platerink. Dixons, the PC retailer, has indicted it wants to sell its 80 per cent stake in Freeserve.
Shares in Scoot.com, the online information service, also suffered yesterday, closing down 8.6 per cent at 85p.
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