Oct. 23 (Bloomberg) -- Toronto-Dominion Bank, Canada’s second-largest bank, agreed to buy the $5.9 billion U.S. credit card portfolio of Target Corp.
The portfolio will be sold for an amount equal to the gross value of the outstanding receivables at the time of closing, Minneapolis-based Target said today in a statement. TD also agreed to a seven-year deal to underwrite, fund and own the retailer’s future credit card and Visa receivables in the U.S., the companies said.
Toronto-Dominion said the transaction will help it meet a forecast for $1.6 billion in U.S. consumer-banking profit by next year. The Toronto-based lender has more branches in the U.S. than it does in Canada.
“Our agreement with Target will significantly expand our presence in the North American credit card business,” Toronto-Dominion Chief Executive Officer Edmund Clark said today in a separate statement.
Target will record pretax gains of about $150 million in the third quarter, and additional pretax gains of $350 million to $450 million when the deal is completed, the company said. The second-largest U.S. discount retailer suspended the sale of the credit-card portfolio in January after it had been unable to find a buyer for a year.
Target fell 0.4 percent to $61.95 at 9:12 a.m. in New York. The shares gained 21 percent this year through yesterday. Toronto-Dominion rose 0.2 percent to close at C$82.92 ($83.62) yesterday in Toronto.