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updated: 8/29/2012 10:54 PM

Sears Holdings loses place in S&P 500

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  • People line up to buy appliances at the Sears at Woodfield.

      People line up to buy appliances at the Sears at Woodfield.
    Daily Herald/2010

 
Bloomberg News

Sears Holdings Corp. was replaced in the Standard & Poor's 500 Index by chemical maker LyondellBasell Industries NV, according to S&P, which said the retailer has too few shares available for trading to be representative of American companies.

LyondellBasell, a Rotterdam-based company that emerged from bankruptcy in 2010, will join the S&P 500 after the close of trading on Sept. 4, the index manager said. The revisions in the S&P 500 may prompt money managers to shift holdings to match the adjustments. About $5.58 trillion was benchmarked to the S&P 500, according to the S&P website.

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Sears, based in Hoffman Estates, has 106.5 million shares outstanding and 36.1 million shares that can be traded, based on data compiled by Bloomberg. The retailer is controlled by hedge-fund manager Edward Lampert. He and his RBS Partners LP hedge fund own a total of 61.7 percent of the company, while Fairholme Capital Management has 15.8 percent, regulatory data compiled by Bloomberg show.

"While we're disappointed in Standard & Poor's decision, we would point out that the action is rules-based and solely a function of the public float of our shares, and not the valuation or performance of the company," Chris Brathwaite, a Sears spokesman, said in an e-mail.

Shares of LyondellBasell have climbed 46 percent this year, compared with an increase of 12 percent in the S&P 500, as earnings beat analysts' estimates for a second straight quarter. The inclusion would put the company, valued at $27.2 billion, as the 117th biggest behind Time Warner Cable Inc. in the benchmark gauge, data compiled by Bloomberg show.

2007 Merger

LyondellBasell is the result of the 2007 merger of Lyondell Chemical Co. and Basell NV. The company sought Chapter 11 protection on Jan. 6, 2009, when it ran short of cash during the financial crisis. The company is located in Rotterdam, where Basell was based, and senior executives run the company from Lyondell's former headquarters in Houston.

Sears has rallied 81 percent this year, reversing a 56 percent slide in 2011. The retailer this month reported a smaller second-quarter loss, helped by reduced inventory costs.

Sears had its biggest annual loss since at least 1987 for the year ended January, as its main department-store business lost ground to rivals including Macy's Inc. The company is selling stores and said in May that it would partially spin off its Canadian operations to generate cash as sales declined for five straight years.

--With assistance from Jack Kaskey and Lauren Coleman-Lochner in New York. Editors: Jeff Sutherland, Stephen West

To contact the reporters on this story: Lu Wang in New York at lwang8bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomassonbloomberg.net

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