By Sudip Kar-Gupta
LONDON (Reuters) - Sports Direct (L:SPD) and Aberdeen Asset Management (L:ADN) will drop out of Britain's benchmark FTSE 100 (FTSE) equity index after a slump in their share prices since the start of 2016.
Other companies to be relegated from the top British shares index will be diversified engineering company Smiths Group (L:SMIN) and Hikma Pharmaceuticals (L:HIK), the London Stock Exchange said on Wednesday.
Those four companies will be replaced in the FTSE 100 by gambling company Paddy Power Betfair (L:PPB), supermarket operator WM Morrison (L:MRW), publishing company Informa (L:INF) and private hospital operator Mediclinic International (L:MDCM).
Getting into the FTSE 100 can often fuel further demand for a company's shares, since funds that track the FTSE or invest in the index can then add that stock to their portfolio, while the inverse is true if a company falls out of the FTSE 100.
Sportswear retailer Sports Direct, founded and majority owned by billionaire Mike Ashley, had been impacted by allegations over the treatment of staff in Britain and a profit warning. Sports Direct shares have 27 fallen percent since the start of 2016.
In December, Sports Direct responded to critics of its employment practices with the launch of a review of conditions for its thousands of agency warehouse workers.
Aberdeen Asset Management's shares have also fallen around 10 percent since the start of 2016, with the fund management company hit by a slump in emerging markets.
The rankings are decided on market capitalisation. Companies with the lowest market cap in the FTSE 100 drop into the FTSE 250 mid-cap index, and vice versa.
The changes will take effect on March 21.