Target to sell half its credit-card receivables
March 13, 2008-- Home Textiles Today,
Minneapolis – Target Stores said it is negotiating “with a credit partner” to sell about half of its credit-card receivables; the price will be $4 billion.
Once terms are agreed upon, Target expects the deal to close in the second quarter of 2008. The company stressed it expects to enter a “new, long-term relationship” with the investment partner in question.
The $63 billion retailer noted that the proposed deal would satisfy the goals it announced in September last year, namely to provide cash from a non-debt source, while maintaining its credit card business.
The move stems in part from pressure exerted by Pershing Square Capital Management, which in July 2007 said it had acquired 9.6% of Target common stock; Pershing managing member William Ackman said he would suggest ways to “correct” the undervaluation of Target’s share price. Target then said it would work with Goldman Sachs to review its credit card business.