Notable Mergers and Acquisitions of the Day 10/23: (TGT)/(TD) (RY) (HLYS) (BBCN)
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- Target Corporation (NYSE: TGT) announced today that it has reached an agreement to sell its entire consumer credit card portfolio to TD Bank Group (NYSE: TD) for an amount equal to the gross value of the outstanding receivables (“par”) at the time of closing. Target’s portfolio currently has a gross value of approximately $5.9 billion. In addition, the two companies entered into a seven-year program agreement under which TD will underwrite, fund and own future Target Credit Card and Target Visa receivables in the United States. Under the program agreement, TD will control risk management policies and regulatory compliance and Target will continue to perform account servicing functions. This transaction, which is subject to regulatory approval and other customary closing conditions, is expected to close in the first half of calendar 2013.
Under the seven-year program agreement, which applies to Target’s U.S. credit card operations, Target will maintain the current deep integration between its financial services operations and its retail operations. The agreement does not have any impact on Target’s 5% REDcard Rewards program. Target team members will continue to provide all servicing for Target Credit Card and Target Visa accounts. The portfolio sale and program agreement are designed to have minimal impact on Target's current cardholders, guests and the Target team members who support financial products and services.
- Ally Financial Inc. (Ally) reached an agreement to sell its Canadian auto finance operation, Ally Credit Canada Limited, and ResMor Trust to Royal Bank of Canada (RBC) (NYSE: RY).
The transaction is subject to regulatory approval and is expected to close in the first quarter of 2013. Ally will receive an approximately $620 million USD premium to book value, which for the third quarter of 2012 was approximately $3.5 billion. Based on the third quarter total equity for the Canadian operations, Ally would receive approximately $4.1 billion USD in proceeds from this transaction.
"This transaction represents another significant step toward our plans to pursue strategic alternatives for our international operations and accelerate plans to repay the remaining U.S. Treasury investment," said Ally Chief Executive Officer Michael A. Carpenter. "The Canadian transaction is the second transaction in a week to support these goals. We continue to evaluate options for our remaining international operations in Europe and Latin America, and we are encouraged by the progress and interest in the businesses."
- Heelys, Inc. (Nasdaq: HLYS) and The Evergreen Group Ventures, LLC entered into a definitive asset purchase agreement under which an affiliate of Evergreen will acquire substantially all of the operating assets and assume substantially all of the operating liabilities of Heelys and its subsidiaries for $13.9 million in cash, subject to customary pre- and post-closing adjustments.
Heelys' cash and marketable securities, which totaled approximately $58.2 million as of June 30, 2012, will not be included in the assets to be acquired in the Transaction. The Transaction was unanimously approved by Heelys' board of directors.
The Board also unanimously determined that following the closing of the Transaction, the Company should be dissolved and liquidated pursuant to a plan of liquidation and dissolution. The Plan of Dissolution is conditioned on the consummation of the Transaction and obtaining approval of the Company's stockholders relating to such Plan of Dissolution. Following the closing of the Transaction and the payment of outstanding liabilities, along with the taking of other actions specified in the Plan of Dissolution, the Company intends to distribute the net proceeds of the Transaction and the liquidation and dissolution of the Company to the Company's stockholders in one or more liquidating distribution installments.
- BBCN Bancorp, Inc. (Nasdaq: BBCN), based in Los Angeles, and Pacific International Bancorp, Inc. (OTCBB: PIBW), based in Seattle, today jointly announced the signing of a definitive agreement under which Pacific International Bancorp will merge with BBCN.
Pacific International has total assets of approximately $200 million, and its primary subsidiary, Pacific International Bank, a state-chartered bank, has four bank locations in the Seattle metropolitan area. Upon completion of the transaction, which is expected to close during first quarter 2013, BBCN will have six branches in the Seattle area.
Under the terms of the merger agreement, the stock-for-stock transaction is valued at approximately $8.2 million, valuing each outstanding share of Pacific International common stock at $1.75. As part of the transaction, Pacific International’s $6.5 million in Series A Preferred Stock issued under the U.S. Treasury’s TARP Capital Purchase Program will be retired.
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