The list of the UK's biggest public companies is revised every quarter – and this time round, based on valuations at the close of play of Tuesday, the Rock was one of seven blue-chip incumbents to drop out (retailer DSG International, housebuilder Barratts and pub owners Mitchells & Butlers and Punch Taverns were also sucked into the relegation dog-fight).
Hours later, chief executive Adam Applegarth was also on the way out, despite originally saying he would stay until the end of January. The Rock named Andy Kuipers as his replacement, though how long he lasts is anyone's guess - both Virgin or Olivant are likely to want their own person at the helm if their bid succeeds.
News of its relegation won’t exactly have come as a surprise to the Rock’s board, or the various parties interested in buying, selling or closing it – after all, having seen the best part of £5bn wiped off its market value since the summer, it’s now worth about 20% as much as the smallest company in the revised list.
But it’s not just a loss of prestige that we’re talking about here. Dropping out of the FTSE 100 means that all the passive tracker funds – who are obliged to own shares in all these blue-chip companies – will immediately have to sell their stock. And since these funds have held onto their Rock shares even as most shareholders have been trying desperately to flog them, they’ve helped prop up the share price. When they start selling, it’s likely to slide again.
And if this continues, it’ll provide more grist to the mill of the pro-nationalisation lobby – like the Lib Dems, who are claiming that it’s the least worst option. Although not all politicians agree – Tory leader David Cameron told BBC Radio 4 that it would represent ‘a monumental failure’ for the government, while Shadow Treasury Minister Mark Hoban also criticised them in the House of Commons on Wednesday.
Then again, the government may not have much choice in the matter. Unless the Rock’s would-be buyers can persuade some banks to lend it the £25bn it needs to pay back the Treasury – and in recent weeks the banks have all had short arms and deep pockets – a private sale just isn’t going to happen. It's certainly not ruling out the possibility of nationalisation, according to MP Kitty Ussher's statements to the House on Wednesday afternoon.
And this morning the Times is reporting that Olivant has threatened to pull out of the bidding altogether, because it's so frustrated with the way the Rock is running the process.
So at the moment, the Rock’s FTSE status is probably the least of anyone's worries...