JPMorgan Chase & Co., the world's second-biggest credit card issuer, agreed to buy $2.1 billion of uncollected card bills from Sears Canada Inc., the country's third-largest department store chain.
Sears Canada said Wednesday that it would receive $1.8 billion of net cash proceeds from the deal, after factoring in unpaid debts and unspecified costs and taxes. The card business has about 1,000 employees and 10 million accounts.
JPMorgan Chase is battling Bank of America Corp. and Citigroup Inc. for a bigger share of the credit card market. Two independent issuers, MBNA Corp. and Providian Financial Corp., are in the process of being acquired. Federated Department Stores Inc. is selling its private-label card portfolio to Citi, and Circuit City Stores Inc. sold $1.8 billion of receivables last year.
Sears Canada, in which the U.S. company Sears Holdings Corp. owns a 54% stake, would record an after-tax gain of about $545.7 million from the sale.
The deal, expected to close this year, includes both Sears Canada's private-label cards as well as those co-branded with MasterCard International Inc. JPMorgan Chase and Sears Canada also agreed to a 10-year marketing and servicing pact.
JPMorgan Chase said the purchase would begin contributing to profits next year.
