In another bad sign for Britain's battered home builders, Persimmon /zigman2/quotes/206444744/delayed UK:PSN -1.76% PLC has been chucked out of its home: the FTSE 100 index.
The FTSE Group, which runs the index, decided Wednesday that Persimmon's shrinking market capitalization is too small to justify its place in the index. The eviction has a near-term financial hit: The many investment funds designed to buy FTSE 100 stocks won't be buying its shares. A company spokesman declined to comment.
The index examines its makeup quarterly and often reshuffles. Companies are ranked by market capitalization, and any name that slips to 111th place or below automatically is kicked out. Those landing in the gray area of 100 to 110 can remain, depending on the competition for the 100 slots. Such judgment calls are made by the FTSE Group. Persimmon clocked in at No. 162.
Four players are joining the FTSE 100: Mining company Ferrexpo /zigman2/quotes/208342608/delayed UK:FXPO -1.41% PLC, power-station operator Drax Group PLC, oil-services company Petrofac /zigman2/quotes/202340229/delayed UK:PFC -1.38% Ltd. and global technology group Invensys PLC. Also leaving the index are lender Alliance & Leicester PLC, retailer Home Retail Group /zigman2/quotes/221810778/delayed UK:HOME -0.43% PLC and sugar refiner Tate & Lyle /zigman2/quotes/205109332/delayed UK:TATE -2.33% PLC. The changes take effect on June 23.
Like other major United Kingdom home builders, Persimmon has been buffeted by a decline in house prices, weak consumer sentiment and choked-off bank lending.
After a dour report on home building by Merrill Lynch's Mark Hake , Persimmon fell nearly 3% to 376 pence ($7.35). Its shares have lost more than 50% of their value this year. "With rising unemployment, rapidly increasing interest rates and sharply squeezed affordability, the U.K. housebuilding sector entered a five-year period in the doldrums" in the early 1990s, Mr. Hake said in a note. "That, we suspect, is what we are facing yet again."
Landmark Pub Hears Last Call
A landmark pub at the edge of London's Canary Wharf financial district is set to be demolished to make way for luxury apartments aimed at City bankers, irking local residents fed up with the area's up-market developments.
The City Pride pub, a local favorite, sits in the shadow of offices for firms such as Credit Suisse Group, Citigroup and HSBC. In recent years, the pub has become popular with executives working in Canary Wharf. Now, the pub and the land it occupies have been bought by a real-estate developer for £32 million ($62.5 million).
The City Pride's new owner, Glenkerrin Homes Ltd., plans a 60-story tower with 400 apartments and a five-star hotel on the 0.6-acre site. That plan has drawn fire from residents, who are angry that another traditional landmark is giving way to housing and amenities for the financial elite.