Paddy Power owner Flutter Entertainment will replace Unilever in one of the euro area's main stock benchmarks as a result of a technical change.

Bloomberg said that Unilever's move to combine its UK and Dutch arms under a single British headquarters means it will automatically be removed from the Euro Stoxx 50 benchmark.

Flutter Entertainment's Dublin-listed stock will be added to the gauge. 

Unilever drops out of the index after deciding to eliminate dual legal structures, a move that will result in one class of shares and a single pool of liquidity, providing more flexibility for stock-based dealmaking. 

Its replacement, Flutter, has rallied 45% year-to-date, partly driven by the completion of the firm's takeover of PokerStars-owner The Stars Group. 

Unilever remains part of the wider European benchmarks, but the step will also affect the Stoxx Europe 600 and Stoxx Europe 50 Index where both the UK entity as well as the Dutch shares were included. 

Inclusion in widely followed indexes is becoming more important for companies in a world increasingly dominated by passive investment funds.

Bank of America strategists predict that equity assets in index-tracking funds will surpass actively managed portfolios in August 2021. 

All index changes announced today will become effective November 30. Stoxx's official index review is set to take place on December 1.

Shares in the company moved higher in Dublin trade today.