Target in talks to sell some credit assets

ATLANTA (Reuters) - Discount retailer Target Corp (TGT.N) said on Wednesday that it is in talks with an investment partner to sell an undivided interest in about half of its credit-card receivables for about $4 billion.

Target's shares were up 1.3 percent in extended trading after the news.

If an agreement is completed, a closing during the second quarter looks possible, the retailer said in a statement, adding that the deal was subject to definitive accords and various approvals.

The retailer said a completed deal with the unidentified investment partner would "generate substantial liquidity" to the company from a single source unrelated to the debt capital markets while continuing to use the skills of Target's internal staff to service customers.

It also said an agreement would lead to a relationship with "an investment partner whose broad experience is expected to result in strategic and financial benefits" to Target over time.

Target had announced in September that it was considering selling an estimated $7 billion in credit-card assets, which included the Target Visa Card and Target Credit Card and other financial products.

The announcement of Target's strategic review last year came two months after hedge fund investor William Ackman had disclosed a 9.6 percent stake in the discounter, saying Target needed to take steps to increase its share price.

Minneapolis-based Target is one of the last major U.S. retailers to have kept its credit assets. Dillard's Inc (DDS.N) sold its credit card subsidiary to GE Consumer Finance in 2004, and Sears, Roebuck and Circuit City Stores CC.N have made similar moves in recent years.

Target shares rose to $51.80 in extended trading from their close of $51.09 on the New York Stock Exchange after the news was announced.

(Reporting by Karen Jacobs; Editing by Gary Hill)