Like The Herald Business Journal on Facebook!
The Herald of Everett, Washington
Customer service  |  Subscribe   |   Log in or sign up   |   Advertising information   |   Contact us

The top local business stories in your email

Contact Us:

Josh O'Connor
Phone: 425-339-3007

Maureen Bozlinski
General Sales Manager
Phone: 425-339-3445
Fax: 425-339-3049

Jim Davis
Phone: 425-339-3097

Site address:
1800 41st Street, S-300,
Everett, WA 98203

Mailing address:
P.O. Box 930
Everett, WA 98206

HBJ RSS feeds

Target to sell credit card business to TD Bank

SHARE: facebook Twitter icon Linkedin icon Google+ icon Email icon
By Anne D'Innocenzio
Associated Press
NEW YORK -- Target Corp. on Tuesday said it reached a deal to sell its entire consumer credit card business to TD Bank Group, ending an almost two-year search for a buyer.
The discounter, based in Minneapolis, said the sale price is equal to the gross value of the outstanding receivables at the time of closing. Target's portfolio currently has a gross value of about $5.9 billion.
The two companies also entered into a seven-year pact under which TD Bank will underwrite, fund and own future Target credit card and Target Visa receivables in the U.S.
As part of the agreement, TD Bank, based in Toronto, will control risk management policies and regulatory compliance and Target will continue to perform account servicing functions. That means TD Bank will make decisions about things like which applications are accepted and what interest rates are charged to customers, for example, while Target still handles bill processing and customer service issues.
Target said the agreement doesn't have any impact on Target's Red Card credit card holders, who receive a 5 percent discount on purchases.
The transaction, subject to regulatory approval, is expected to close in the first half of calendar 2013.
Target said that it expects its third-quarter earnings per share will reflect a pre-tax gain of about $150 million due to a change in the accounting treatment of is receivables from "held for investment" to "held for sale."
Furthermore, at closing, Target expects to recognize an additional pre-tax gain of $350 million to $450 million on the sale of its portfolio. Target says it plans to use 90 percent of the net proceeds to reduce the company's debt; it aims to use the remaining funds to repurchase its stock over time.
In a statement, Ed Clark, group president and CEO of TD Bank Group, said that the agreement will "significantly expand our presence in the North American credit card business and will establish TD as a key player in the space."
Target said in January 2011 that it intended to sell its credit card business, but put those plans on hold at the beginning of this year.
Target shares slipped 42 cents to $61.76 in morning trading. TD Bank shares, which trade as Toronto-Dominion Bank, fell $1.21, to $82.33.
Story tags » Retail



Market roundup