Oh, the indignity! Taylor Wimpey falls out of FTSE 250.
December 10th, 2008
Where next for Taylor Wimpey?
When Taylor Wimpey fell out of the FTSE 100 in March, it was not unexpected but still a shock in symbolic terms.
Was the construction industry really faring so badly against the caterers, retailers and travel agents that had stayed in?
Well, if that wasn’t a bad enough, it has now dropped out of the FTSE 250 – the secondary tier of 250 companies that sits behind the top 100 firms by market cap in the country.
According to FTSE figures, it was ranked 450 yesterday evening, sealing its fate and second fall from grace.
Barratt, meanwhile, breathes again. It ended the day on which companies are promoted or relegated in 353rd spot. The quirks of the Stock Market mean a company has to finish in 376th spot or below at the end of each quarter to be relegated out of the FTSE 250.
As Taylor Wimpey’s future appears to hang by a thread, one person close to the debt talks said politics would play an equally important role as economics in deciding its fate .
“Taylor Wimpey isn’t going anywhere,” he said. “The government won’t let it happen because it would be a political disaster. If its future was in serious doubt, its bankers would get a tap on the shoulder and be invited along to a meeting at the Treasury. Then they’d be reminded how they had to be helped out - and by who.”
Readers' comments
Damien Vaugh 10 December, 2008 | Reply
The FT has today published the findings of pensions consultants Lane Clark & Peacock which show that Taylor Wimpey have one of the worst positions when it comes to pension fund deficit compared to market capitalisation of any company in the UK. Ranked at 3rd place TW have a dismal 10% figure of pension fund deficit.
While I would agree that the future of TW has political implications, I dont agree with the conclusion. Simply put it would be politically permissable to allow TW to go into insolvancy to protect the pension funds(thousands of people) who would become the first in line to be paid out from any assets.
The government has destinguished between the need to protect the banking system and protection of individual companies in the building industry.
The most likely outcome for TW is a merger/takeover once further writedowns in land values have taken place.
Losing its place in the FTSE 250 has not lead to news headlines indicating its relative importance in the public/political arena.