Why the Redbubble (ASX:RBL) share price could charge higher today

The Redbubble Ltd (ASX:RBL) share price could be on the move on Monday after being added to the benchmark ASX 200 index…

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The Redbubble Ltd (ASX: RBL) share price will be one to watch on Monday morning.

This follows the release of an announcement by S&P Dow Jones Indices after the market close on Friday.

What was announced?

On Friday, S&P Dow Jones Indices announced that it would be removing beverage giant Coca-Cola Amatil Limited (ASX: CCL) from the benchmark S&P/ASX 200 Index (ASX: XJO).

This follows news that the independent shareholders of Coca-Cola Amatil have voted in favour of the takeover offer by Coca-Cola European Partners (CCEP).

That offer sees the European bottler acquire Coca-Cola Amatil all the shares in Coca-Cola Amatil held by independent shareholders (all shareholders other than The Coca-Cola Company) for $13.50 cash per share less the cash amount of the final second half 2020 dividend of 18 cents per share.

According to the results of the vote, 81.55% of independent shareholders present and voting, in person or by proxy, voted in favour of the scheme resolution.

This means that pending approval of the Supreme Court of New South Wales on Tuesday, the takeover will essentially be complete.

Hence why S&P Dow Jones Indices is planning to remove Coca-Cola Amatil's shares from the benchmark index this week.

How does this impact Redbubble shares?

S&P Dow Jones Indices needs another company to replace Coca-Cola Amatil and has picked the ecommerce company.

According to the release, if everything goes to plan, S&P Dow Jones will remove Coca-Cola Amatil from the ASX 200 and replace it with Redbubble prior to the open of trading on 22 April.

This could be good news for the Redbubble share price as many fund managers have strict mandates in relation to the shares they can buy.

One common mandate is that they only buy shares listed on the ASX 200. So, the company's inclusion on the index brings Redbubble into play for fund managers looking to deploy funds.  

In addition to this, index-tracking funds will be needing to buy its shares in order to reflect the changes.

All in all, increased demand from the buy side could be a positive for the Redbubble share price in the coming weeks.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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