Rentokil set for demotion from FTSE 100

Housebuilder Taylor Wimpey and pest control firm Rentokil Initial were today facing the boot from London’s FTSE 100 Index.

Housebuilder Taylor Wimpey and pest control firm Rentokil Initial were today facing the boot from London’s FTSE 100 Index.

Directories company Yell, publisher of Yellow Pages, is also in line for demotion when the quarterly review of London’s blue-chip index takes place, based on market valuations at the close of trading on Tuesday.

The trio could be replaced by ingredients company Tate & Lyle, distribution firm Bunzl and stock market newcomer, Eurasian Natural Resources. The iron ore company floated in December and is now worth almost £14bn (€18bn).

Rentokil’s relegation will cap a miserable month for the company after its shares tumbled in the wake of problems with its City Link delivery arm.

The “unacceptable” performance from the business – hit by falling consumer spending and poor management – will leave pre-tax profits significantly below 2007’s £142m (€185m).

Brian McGowan is stepping down after four years as chairman, but reports today said leading shareholders had called on the company to find a replacement who can also fill the role of chief executive Doug Flynn.

The Sunday Telegraph said Rentokil’s senior independent director Peter Long had been told to find a new executive chairman within weeks.

Meanwhile, uncertainty in the property market could leave just Charles Church owner Persimmon as the City’s only top-flight housebuilding stock. Barratt lost its place in December and Taylor Wimpey is likely to follow suit following a 66% fall in its share price since early April.

Yell shares dived heavily last month after it said larger corporate customers were cutting back their budgets amid the tighter economic conditions.

Tate & Lyle is in line for a swift return to the Footsie after being relegated at the end of last year. And the boom in commodity stocks will be highlighted by the elevation of Eurasian, a company 15% owned by Kazakhmys, which is another member of London’s stock market elite.

Changes to the FTSE 100 Index will take effect from the start of trading on Wednesday March 26.

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