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Hammerson to crash out of the FTSE 100 during reshuffle

Hammerson's share price has slipped 14pc since the deal with Intu - PA
Hammerson's share price has slipped 14pc since the deal with Intu - PA

Hammerson is set to crash out of the FTSE 100 after doubling down on its exposure to struggling shopping centres by snapping up its rival Intu Properties.

Its 14pc share price slide since announcing the £3.4bn deal leaves it perilously close to the FTSE 100 trapdoor ahead of a quarterly reshuffle in just over a week.

The Birmingham Bullring owner raised eyebrows in December by swooping for Intu amid concerns that UK shopping centres are in a state of terminal decline as consumers switch to online retailers.

Analysts also fear that the merger will dilute Hammerson’s higher-quality portfolio and ramp up its exposure to the inflation-squeezed UK shopper.

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The tie-up is a “marriage of convenience” and Hammerson’s shareholders will feel aggrieved by the deal watering down their exposure to the company’s “‘crown jewels’ of premium outlets”, Peel Hunt warned ahead of its completion.

Turnaround specialist Melrose Industries is one of the FTSE 250 top risers vying for Hammerson’s place as it looks to land a £7.4bn hostile takeover of engineering giant GKN. Melrose is trying to persuade GKN shareholders that time is up for the FTSE 100 company’s board to deliver returns for its investors.

GKN chairman Mike Turner rebuffed Melrose’s claims, arguing that the offer represents a “very low” premium for shareholders and calling into question its experience in the field.

GKN, which has long been under pressure to split up its core automotive and aerospace divisions, is attempting to woo investors by handing back £2.5bn to shareholders over the next three years and bowing to the break-up demands.

Recently relegated Royal Mail is also poised for an instant return to the big league after finally striking a deal with unions over its bitterly disputed pensions scheme.

After sinking to its lowest level since privatisation in November, its share price has soared 47pc amid hopes that increasing parcel volumes from online shopping can displace declining letter deliveries.

Royal Mail could take the place of security outsourcer G4S or United Utilities, which have also slipped towards the FTSE 100 exit since the last reshuffle in November.

The reshuffle will be based on companies’ market capitalisation at the close of play on Feb 28 with any movers between the two indices confirmed the following day.

A FTSE 100 company can only drop out of the index if its market cap is lower than that of the 10th highest valued company on the FTSE 250, and vice versa if a mid-cap firm wants to make the leap up.