Citigroup to Buy Federated, May Credit Card Portfolios
Citigroup Inc. will acquire all the accounts in the credit card portfolios of Federated Department Stores Inc. and The May Department Store Company, Cincinnati-based Federated reported yesterday.The credit card businesses have a combined $6.6 billion in receivables and 17 million active accounts. Citigroup will buy them in three transactions and is expected to pay an 11.5 percent premium, or about $760 million. Federated said it expects after-tax proceeds of about $4.5 billion from the sale, which it plans to use to fund its acquisition of May.
Federated and Citigroup also entered into a multi-year agreement to co-manage the accounts that provides for Federated to receive ongoing payments based on credit sales and other performance metrics of the credit portfolio after the sale is completed.
The two companies also will work together on marketing initiatives designed to accelerate Federated's same-store sales gains and credit growth.
No changes are planned for Federated's credit card or loyalty reward programs as a result of this transaction.
Chantal Todé covers catalog and retail news and BTB marketing for DM News and DM News.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters
