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Sears to exit S&P 500

Sears Holding Company has had its membership in the S&P 500 revoked.

The ailing retailer, which owns Sears and K-Mart chains as well as apparel brand Land's End, will exit the index at the close of trading on Tuesday, Sept. 4, said S&P late Wednesday.

S&P said the number of Sears shares available to the public, known as its public float, has long been below the 50% threshold needed to be considered "representative of the index."

Sears chairman Edward Lampert, founder of hedge fund ESL Investments, controls 62% of the company's shares.

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Sears has been a member of the S&P 500 index since it was founded in 1957. Before that, it had been a component of the Dow Jones industrial average, which it had joined in 1924 (and left in 1999).

S&P said Sears will be replaced by LyondellBasell, a chemicals company based in The Netherlands.

Shares of Sears (SHLD) fell 7% Thursday morning, but the stock is still up about 73% for the year. Sears is listed on the Nasdaq.

The expulsion means that index fund managers that seek to mimic the S&P 500 will need to sell shares of Sears and buy LyondellBasell stock.

Shares of LyondellBasell (LYD) were up 3%.

Sears has struggled with declining sales since it merged with Kmart in 2005. The more than 100-year old retailer has closed hundreds of stores and has announced plans to spinoff certain brands in a bid to raise cash. The company's straits have fueled persistent rumors of bankruptcy.

Despite its woes, Sears was one of the best performing stocks in the S&P 500 as recently as April.

Sears said in a statement that it was disappointed with S&P's decision, pointing out that the move was not necessarily a reflection of "the valuation or performance of the company."