Six sink in Footsie shake-up

Six companies learned yesterday that they have lost their coveted status in the FT-SE 100 in the biggest shake-up for two years in the index of Britain's leading shares. Victims of the Stock Exchange's strict formula for inclusion slip out of the Footsie on 18 December when they will face a wave of selling pressure from tracker funds whose portfolios are designed to reflect exactly movements in the various indices.

The number of changes in the latest quarterly review was boosted by the Exchange's decision to remove Inchcape, the lowest-ranked company in the index, to accommodate the inclusion of the National Grid, which will be a FT-SE 100 company from the start of dealings on Monday. Inchcape's departure, after four years in the index, follows a disastrous share price performance which left it as only the 130th-largest quoted company.

A side effect of the flotation of the Grid has been the removal of both London and Midlands Electricity, whose market values have been hit by the transfer to shareholders of their stakes in the electricity transmission business. Other companies to drop out include Sears, one of the original constituents when Footsie was devised in 1984. Despite the best efforts of the chief executive, Liam Strong, Sears has struggled with a disparate array of retail brands. Arjo Wiggins also falls out, as does De La Rue, which fell foul of investors last week after it warned that higher-than- forecast results in the past had fuelled unrealistic expectations.

Winners from this quarter's switch include Pilkington, which has benefited from new management and an upturn in its construction and automotive cycles, Smiths Industries, Argos and Foreign & Colonial Investment Trust.

Burton, which rejoins the index after an absence of five years, has been guided back to the top flight by its American chief executive, John Hoerner, who took over in 1992. He has moved the group away from a culture of permanent discounts.

Under Stock Exchange rules all quoted companies are ranked by market capitalisation once a quarter. Any company whose share price rise has placed it higher than 90th in the league table automatically gains entrance to Footsie. Companies slipping below 110th place automatically fall out.

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