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Ocado to enter FTSE 100 for first time ever as M&S hangs on ‘by skin of its teeth’

G4S has been demoted to the FTSE 250 after a brief return to the top index

Caitlin Morrison
Thursday 31 May 2018 08:06 BST
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Ocado’s deal with Kroger has driven it into the FTSE 100
Ocado’s deal with Kroger has driven it into the FTSE 100

Ocado will enter the FTSE 100 for the first time ever next month, after its share price was boosted by 40 per cent on news that it struck a deal with US grocery giant Kroger.

Also moving up to the blue chip index is Ladbrokes Coral owner GVC Holdings, according to FTSE Russell, which conducts a quarterly review of which companies belong in the various indexes.

In order to rebalance the FTSE 100, security firm G4S and private hospital group Mediclinic International will drop down to the FTSE 250. G4S rejoined the FTSE 100 in June last year, having previously been demoted in December 2015 after eight years in the index, following a collapse in earnings after the company became embroiled in a scandal relating to UK public contracts in 2013.

Marks and Spencer has hung on to its spot in the FTSE 100, despite fears that it would fall out of the top index for the first time in its history. The retailer’s share price has been on a downward trajectory for months, not helped by its announcement earlier this month that it plans to close 100 stores.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said M&S had avoided relegation “by the skin of its teeth”.

“Reshuffles happen every three months though, so this is a stay of execution rather than a full pardon,” he added.

“M&S boss Steve Rowe is promising transformation, and has been candid in admitting it’s a lengthy road ahead. However, the pace of disruptive technological change means making M&S special again is a moving target, and management are taking aim from a long way out.”

Mr Khalaf said Ocado’s promotion into the FTSE 100 was a “sign of the old economy giving way to the new”.

“A spate of licensing agreements has trumped up the share price in recent months, and shows that Ocado is well versed in the art of the deal,” he said.

Changes to the makeup of the various FTSE indexes will take effect from 18 June.

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