US: Target steps into Canada with $1.83bn Zellers buy
Value retailer Target Corporation is making its first foray outside the US after agreeing a CAD1.825bn (US$1.83bn) deal to take over leases for up to 220 stores operated by discount chain Zellers, a subsidiary of Hudson's Bay Co.
The purchase will allow Target to begin opening its first stores in Canada beginning in 2013, the retailer said Thursday (13 January), with up to 150 Target stores set to operate by 2014.
"This transaction provides an outstanding opportunity for us to extend our Target brand, Target stores and superior shopping experience beyond the United States for the first time in our company's history," explains Gregg Steinhafel, chairman, president and CEO of Target Corporation.
"We believe our investment in these leases will strengthen the surrounding communities as well as create strategic and financial value for Target stakeholders."
Under the terms of the deal, Target will pay Zellers two equal tranches of C$912.5m in May and September this year. Zellers will sub-lease these sites from Target and continue to operate them under the Zellers banner for a period of time.
The retailer's move into the Canadian market will be overseen by chief marketing officer Michael Francis.
Target, which currently operates 1,752 stores, also said it is trying to sell its credit card receivables portfolio, which totalled $6.7bn as of 30 October.
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