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Target Selling Mervyn's

MINNEAPOLIS - Target Corp., based here, has reached definitive agreements to sell its Mervyn's department store division to an investment consortium for an aggregate consideration of approximately $1.65 billion in cash.

Mervyn's, based in the San Francisco Bay area, has 257 stores in 13 states, mainly in the west and south. In 2003 Mervyn's generated $3.6 billion in revenue and $160 million in pretax segment profit.

Under the agreements, Target will sell its Mervyn's retail subsidiary to an investment consortium that includes Sun Capital Partners, Inc., Cerberus Capital Management, L.P., and Lubert-Adler/Klaff and Partners, L.P. Additionally, Target will sell Mervyn's credit card receivables, which totals approximately $475, to GE Consumer Finance, a unit of General Electric Co. Mervyn's will continue to operate from its headquarters in Hayward, Calif. as an independent company.

The sale, which is subject to regulatory approval, is expected to result in an estimated gain in the range of $270 million before tax, or about 18 cents per share, in the third quarter.

Target chairman and c.e.o. Bob Ulrich said in a statement, "We believe that the sale of Mervyn's as an ongoing business reflects our long-term commitment to create substantial value for our shareholders over time and enhances the opportunity for all of our stakeholders, including our team members, guests, and communities, to enjoy continued success for many years."
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