Minneapolis Target Corp. said on Wednesday that it is in talks with an investment partner to sell an undivided interest in about half of its credit-card receivables for about $4 billion. Analysts said the move will reduce Target's profits, but improve its ability to buy back stock, which will benefit its earnings per share.
If an agreement is completed, a closing during the second quarter looks possible, the retailer said in a statement, adding that the deal was subject to definitive accords and various approvals.
The retailer said a completed deal with the unidentified investment partner would "generate substantial liquidity" to the company from a single source unrelated to the debt-capital markets while continuing to use the skills of Target's internal staff to service customers.
It also said an agreement would lead to a relationship with "an investment partner whose broad experience is expected to result in strategic and financial benefits" to Target over time.
Target had announced in September that it was considering selling an estimated $7 billion in credit-card assets, which included the Target Visa Card and Target Credit Card, and other financial products.