JPMorgan to invest in Target credit card business

MINNEAPOLIS Target has announced an agreement under which JPMorgan Chase would invest in Target’s credit card receivables. At closing Target would sell an undivided interest in its credit card receivables to JPMorgan Chase for cash proceeds of approximately $3.6 billion. This interest would represent approximately 47% of the principal amount of Target’s outstanding receivables at that time. This transaction is expected to close before the end of May.

“This unique agreement accomplishes the goals set forth in the review of receivables ownership that we initiated on Sept. 12, 2007,” said Doug Scovanner, evp and cfo of Target. “It provides significant liquidity to Target from a single source unrelated to debt capital markets, provides an appropriate sharing of the portfolio benefits and risks between Target and JPMorgan Chase, and allows our guests to continue to benefit from the creativity and expertise of the world-class team at Target Financial Services. Most importantly, this innovative transaction marks the beginning of a long-term credit card relationship between Target and JPMorgan Chase, which we believe will create substantial financial and strategic rewards for both of us over time.” 

On March 12, Target announced that it was in negotiations with an investment partner to sell an undivided interest in approximately half of Target’s credit card receivables for about $4 billion.