Engineering giant is kicked out of the FTSE 100... by a takeaway app: Just Eat to replace Babcock as index reshuffles its list of top firms

  • Global trend is start-ups have far outstripped the value of traditional companies
  • Just Eat started as app, now worth £5.6billion, Babcock is valued at £3.5billion
  • The company works with 79,000 restaurants but only employs about 2,400 staff
  • Babcock was set up in 1891 and has suffered amid a decline in defence spending

One of Britain’s oldest engineering firms is set to be knocked out of the FTSE 100 by a takeaway app set up just 16 years ago.

In a sign of the changing face of industry, 126-year-old defence contractor Babcock international is set to be replaced by Just Eat.

It is the most marked example yet of a global trend in which technology start-ups have far outstripped the value of traditional companies.

Just Eat has seen an incredible rise, which has been on the back of the takeaway boom that has also produced Deliveroo and Uber Eats

Just Eat has seen an incredible rise, which has been on the back of the takeaway boom that has also produced Deliveroo and Uber Eats

Just Eat, a delivery service app used to order takeaway meals, is now worth £5.6billion – while Babcock is valued at £3.5billion. 

The FTSE regularly reshuffles its list of the UK’s 100 biggest firms as they grow or shrink in size.

Analysts say Just Eat is one of three firms that will be promoted in the latest update this weekend at the expense of firms including Babcock.

It will mark an incredible rise for the online start-up, which has risen on the back of the takeaway boom that has also produced Deliveroo and Uber Eats.

Set up in 2001, it was listed on the London stock exchange just three years ago. Its distinctive delivery bikes with red boxes have become a familiar sight across major towns and cities. 

Although it works with around 79,000 restaurants, the firm only employs about 2,400 people, largely in accountancy, marketing and technology roles.

Babcock have the contract to maintain and upgrade British Army Armoured Vehicles but along with other companies has misjudged the risks of such contracts 

Babcock have the contract to maintain and upgrade British Army Armoured Vehicles but along with other companies has misjudged the risks of such contracts 

Steve Clayton, an analyst at investment experts Hargreaves Lansdown, said: ‘There is a massive change going on in the economy.

‘New business models are emerging which are different to the more traditional firms but it’s very different to the dotcom boom because most of them are generating significant sales and cash.’

He added: ‘Just Eat has had an extraordinary rate of growth for a business that supposedly owns nothing.’ 

As Britain embraces the digital age, they spotted a rising demand for takeaway food and simply put themselves ‘between the restaurants and the hungry customer’. 

By contrast Babcock International, which was set up in 1891, has suffered amid a decline in defence spending.

How the two companies, one founded in 1891 and the other set up in 2001, measure up 

How the two companies, one founded in 1891 and the other set up in 2001, measure up 

Mr Clayton said: ‘A lot of what Babcock does is providing out services to parts of government like the Ministry of Defence under long term contracts.

‘In the last few years we’ve seen players like Serco and Capita, which have similar contract relationships, run into problems where they have misjudged the risks and value of the contracts.

‘I think the market is worried that Babcock may fall into the same problems. In business you are only as healthy as your customers.’ Companies that could crash out of the FTSE 100 include Thorpe Park owner Merlin Entertainments and care provider Mediclinic International.

Packaging company DS Smith and hazard protection specialists Halma could potentially enter the blue chip list. Only 30 of the original FTSE 100 companies remain listed, including Tesco, Sainsbury’s and pharmaceutical giant GlaxoSmithKline.

 

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