Weir, ITV set for demotion in next FTSE reshuffle

Broadcaster ITV and engineering firm Weir are set for a demotion from the FTSE 100 in the next reshuffle, while takeover targets Morrisons and Meggitt are in line for a promotion.

Shares in both Morrisons and Meggitt have surged of late due to M&A interest, with the former having agreed last week to be taken over by US private equity firm Clayton Dubilier & Rice in a £7bn deal.

Meanwhile, aerospace and defence group Meggitt has agreed to be bought out by US rival Parker Hannifin for £6.3bn. The company also subsequently received an unsolicited takeover approach from US aerospace manufacturer TransDigm at 900p a share in cash.

Richard Hunter, head of markets at Interactive Investor, said: "The impending FTSE 100 reshuffle is shaping up to be an unusual situation, with two companies currently in the driving seat for inclusion in the index likely to be short-lived promotions.

"William Morrison Supermarkets and Meggitt have both seen their share prices soar due to takeover situations and at current prices would both be promoted. Morrisons have been the subject of a bidding war which has seen its price rise by 62% over the last three months, with private equity firm Clayton, Dubilier & Rice in pole position to win the race for Morrisons and therefore see the shares delisted.

"Similarly, aerospace company Meggitt shares have risen by 71% over the last three months after approaches from both Parker-Hannifin and TransDigm Group. Whichever company ends up with control of Meggitt would result in the shares being removed from the premier index."

ITV and Weir, meanwhile, have both seen their shares drop by 11% over the last three months.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "Love Island may be back but broadcaster ITV looks likely to be dumped from the 100 after a short fling, despite the boost of Euros ad spend. Engineering firm Weir Group is also on the brink after only being promoted earlier in the year."

Cyber security firm Darktrace is on track to enter the FTSE 250 following a successful IPO in April.

An announcement on the quarterly FTSE reshuffle is due on 1st September based on the closing prices from the 31st August.