FTSE 100 live: London closes in the red as Barratt and Sainsbury’s drag index lower
London’s FTSE indexes closed in the red on Wednesday as investors digested the implications of a surprise mega-merger between two listed housebuilders.
The FTSE 100 index closed 0.68 per cent lower at 7,628.75 while the FTSE 250 index, which is more aligned with the health of the domestic economy, was trading 0.31 lower at 19,111.14.
The biggest news in London this morning was the merger between FTSE 100 house-builder Barratt and Redrow, which is listed on the FTSE 250.
In a surprise update this morning, Barratt said the move, which will create the UK’s largest house building firm, would help accelerate the “delivery of homes this country needs.”
The £2.5bn tie-up represents a premium of around 27 per cent on Redrow’s closing price yesterday.
“’The economic winds have not been kind to the housebuilders and Barratt Developments and Redrow clearly believe they’ll be stronger together, giving the new combined company much bigger clout to capitalise on the structural need for housing in the UK,” Susannah Streeter, head of money and markets at Hargreaves Lansdown said.
“With a shortage of homes in great swathes of the UK being pushed up politicians’ priority lists, there is considerable long-term opportunity for a beefed up housebuilder,” she concluded.
Although Redrow shares rocketed nearly 15 per cent, Barratt closed nearly 5.5 per cent lower.
Other housebuilders on the FTSE 100 were more or less flat, but on the FTSE 250, Crest Nicholson jumped 4.6 per cent and Bellway gained 2.8 per cent.
The FTSE 100’s top riser was Smurfit Kappa. Shares in the packaging firm were up 3.6 per cent despite revenue dropping 12 per cent over 2023.
Boss Tony Smurfit said the firm had seen a “progressive improvement in demand during the year, with a return to growth in the fourth quarter”.
Elsewhere Sainsbury’s lost over six per cent after announcing a new three year strategy.
The supermarket giant told shareholders it will increase capital expenditure by around £800m-£850m each year for the next three years.
It also said it will pursue a”progressive dividend policy” from the beginning of the next financial year, and will start a share buyback of £200m, supported by free cash flow of “at least” £500m.