London is the European stock exchange most at risk of suffering big departures to the US, according to a ranking compiled by the Financial Times identifying large companies with the strongest business case to consider a New York listing.
The FT assessed 111 European companies, each with a market capitalisation of at least $10bn and each with their shares trading at a discount to US rivals, to determine which have the strongest case to switch to a New York listing. London-listed groups made up just a fifth of the total — but half of the top 10, and 18 of the top 50.
The finding is further evidence of London’s vulnerability compared with Paris, Amsterdam and Frankfurt as higher US economic growth forecasts and a larger pool of investors strengthen the business case for a move.
Many groups may decide against switching listings for reasons including fear of political backlash and regulatory hurdles. But yawning valuation gaps combined with a more aggressive US industrial policy mean many will feel investor pressure to explore spinning off their US operations. The trading discount also makes them potential takeover targets.
A company’s ranking is based on its valuation discount compared with a group of US peers, the share of its revenues generated in the US and its proportion of North American investors, as calculated and compiled by data provider FactSet. The greater each of these metrics, the higher the company’s position (see methodology below).
London-listed Irish construction group CRH, which will put its decision to move its primary listing to New York to shareholders on June 8, tops the league table. It is followed by cigarette maker British American Tobacco and drugmaker GSK, which generates almost half its revenues in the US. Dutch medical devices group Philips ranks fifth.
The large London-listed mining groups also feature in the ranking. Rio Tinto ranks 14th and Anglo American — whose spin-off AngloGold Ashanti has announced a move to New York — comes in at 30th, ahead of Glencore (35th).
Other European exchanges are not immune. Italian machinery group CNH Industrial (fourth), has announced its retreat from Milan to make New York its sole listing. German diagnostics group Qiagen (28th) said it “periodically” reviewed its dual listings in New York and Frankfurt.
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