Rothmans loses place in Footsie

ROTHMANS International, the cigarettes and luxury goods group, is to be removed from the FT-SE 100 index once its restructuring is complete on 25 October, writes Gail Counsell.

The news knocked 21p from Rothmans' share price, which closed at 623p.

Rothmans, with Dunhill, controlled by the same parent, is being restructured to create two groups, Rothmans and Vendome, each of which will have twin corporate structures reflecting their British and non-UK interests. Shareholders will be able to chose from which they take their dividend stream.

The decision to remove Rothmans from the index relates to the fact that one of the twinned companies will be non-UK resident. The rules governing the index require companies in it to be UK-resident and to distribute dividends as UK-franked income.

Shares in SmithKline Beecham, the Anglo-American drugs group, added 7p to 422p after it secured its place in the index. It had been thought the group might face the same fate since its shares trade either as 'A' ordinary shares or units consisting of 'B' ordinary shares plus a linked US preference share.

A spokesman for the Stock Exchange committee responsible for the FT-SE 100 index said that it wanted to review its definition of a UK company to take account of the increasing number of such internationally organised cross- holdings.

There are five potential candidates to replace Rothmans in the index, though which will succeed will depend on which has the largest capitalisation on the day. They are Southern Electricity, Eastern Electricty, Scottish Hydro, BICC and English China Clays.

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