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GE Consumer Finance Buys Dillard's Credit Card Unit

The $1.25-billion deal has been approved by both firms but is subject to regulatory review.

August 09, 2004|From Associated Press

Dillard's Inc. said Sunday that it had agreed to sell Dillard National Bank, which handles credit cards for the national department store chain, to GE Consumer Finance for about $1.25 billion.

According to an announcement from Little Rock, Ark.-based Dillard's, GE Consumer Finance will assume $400 million in liabilities, purchase the owned-account receivables and pay an undisclosed premium.

The transaction has been approved by both companies but is subject to regulatory review, Dillard's said. The deal is expected to close by the end of the current fiscal year, the company said.

"Substantially all of the approximately 500 employees of Dillard National Bank will become employees of GE Consumer Finance," Dillard's said.

GE Consumer Finance said the purchase included 5.5 million Dillard's charge accounts handled by Dillard National Bank.

Dillard's and GE Consumer Finance said they would also enter into a long-term marketing and servicing alliance, with an initial term of 10 years.

Dillard's said it would use the proceeds from the sale to reduce its debt and repurchase common stock, among other uses.

The long-term marketing and servicing alliance calls for GE Consumer Finance to provide a range of services to Dillard's, including marketing support and dealing with holders of Dillard's credit cards.

The two firms said they would share in the income generated by the alliance. Dillard's said it expected that the income generated by the alliance would be comparable to the earnings generated by Dillard National Bank.

Mark W. Begor, president and chief executive of GE Consumer Finance-Americas, said the partnership would open up "great opportunities to offer more products, benefits and value to Dillard's customers."

William Dillard II, CEO of Dillard's, said the alliance "will provide Dillard's shoppers expanded financing options."

Morgan Stanley served as financial advisor to Dillard's on the transaction, and Dillard's legal advisors were Simpson Thacher & Bartlett and Sidley Austin Brown & Wood.

Dillard's annual revenue exceeds $7.8 billion from 329 stores in 29 states.

GE Consumer Finance, a unit of General Electric Co., has $117 billion in assets. The company provides credit services to consumers, retailers and auto dealers in 40 countries.

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