Target going into Canada, getting out of the credit card business

Target Corp. has announced that it has agreed to pay C$1.825 billion (U.S. $1.84 billion) to purchase from Zellers Inc., a subsidiary of The Hudson’s Bay Company, the leasehold interests in up to 220 sites currently operated by Zellers Inc. This transaction will allow Minneapolis-based Target to open its first stores in Canada beginning in 2013.

"This transaction provides an outstanding opportunity for us to extend our Target brand, Target stores and superior shopping experience beyond the United States for the first time in our company’s history," said Gregg Steinhafel, Target chairman, president and CEO. "We are very excited to bring our broad assortment of unique, high-quality merchandise at exceptional values and our convenient shopping environment to Canadian guests coast-to-coast. We believe our investment in these leases will strengthen the surrounding communities as well as create strategic and financial value for Target stakeholders."

Target has agreed to pay Zellers C$1.825 billion, in two equal payments of C$912.5 million, to acquire the leasehold interests in the sites. Target is expected to make the payments in May and September of 2011. Zellers will sublease these sites from Target and continue to operate them under the Zellers banner for an undisclosed period of time.

Target also announced that it intends to actively pursue the sale of its credit card receivables portfolio, which totaled US$6.7 billion as of October 30, 2010. First Annapolis, a Linthicum, Md., consulting firm, has been engaged to advise Target in this process.