Target Announces Agreement to Sell Credit Card Portfolio to TD Bank Group
Target Corporation (NYSE: TGT) announced today that it has reached an agreement to sell its entire consumer credit card portfolio to TD Bank Group (TSX and NYSE: TD) for an amount equal to the gross value of the outstanding receivables (“par”) at the time of closing. Target's portfolio currently has a gross value of approximately $5.9 billion. In addition, the two companies entered into a seven-year program agreement under which TD will underwrite, fund and own future Target Credit Card and Target Visa receivables in the United States. Under the program agreement, TD will control risk management policies and regulatory compliance and Target will continue to perform account servicing functions. This transaction, which is subject to regulatory approval and other customary closing conditions, is expected to close in the first half of calendar 2013.
"Target is very pleased to have reached this agreement with TD which is the result of extensive efforts by teams at both companies," said Gregg Steinhafel, chairman, president and chief executive officer of Target Corporation. "This transaction achieves all of Target's strategic and financial goals for a portfolio sale. We look forward to working with this premier global financial institution to continue Target's long history of innovation in our guest-focused financial services strategy."
"Our agreement with Target will significantly expand our presence in the North American credit card business and will establish TD as a key player in this space," said Ed Clark, Group President and CEO, TD Bank Group. "We're excited to be working with Target's strong team and leading retail brand. This asset acquisition aligns perfectly with our strategy, fits our risk profile and is a great complement to our high-growth credit card business."
Under the seven-year program agreement, which applies to Target's U.S. credit card operations, Target will maintain the current deep integration between its financial services operations and its retail operations. The agreement does not have any impact on Target's 5% REDcard Rewards program. Target team members will continue to provide all servicing for Target Credit Card and Target Visa accounts. The portfolio sale and program agreement are designed to have minimal impact on Target's current cardholders, guests and the Target team members who support financial products and services.
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