Target Sells Credit Card Business To TD Bank
Target (NYSE:TGT) announcing today it sold its credit card business to TD Bank (NYSE:TD) for $5.9 billion. Under the terms of the deal, TD Bank will have the right to underwrite, fund and manage risk for all future Target credit card receivables for the next seven years. The retailer will continue to receive the majority of the profits from all credit card transactions but it is not clear what percentage Target will get.
In terms of proceeds from the sale, Target says it expects to record a pre-tax gain in the third quarter of $150 million, and could see an additional $450 million in games once the deal closes. The company also assured its current customers that the 5% REDcard Rewards program will remain unchanged through this transition.
Target trading relatively flat on this news at $62.11 while TD Bank is seeing an over 1 percent drop on its shares to a price of $82.33.
