ears, Roebuck and Co. announced that it will sell its credit card division to Citigroup, Inc. Citigroup will pay about $3 billion, or a 10% premium, for the portfolio, which has receivables valued at $29 billion. Sears' expectations of generating at least $6 billion in revenue from the sale will be met; the retailer also will keep $3 billion in cash from the portfolio.

Citigroup agreed to pay Sears at least $200 million annually for 10 years for new accounts and sales on credit.

Sears announced plans in March 2003 ("Come Buy the Costly Side of Sears," The Green Sheet, April 28, 2003, issue 03:04:02) to sell its revenue-draining credit card business, which includes its proprietary cards and co-branded MasterCards. Up to this point, Sears has been the third-largest issuer of MasterCards and the eighth-largest credit issuer in the U.S. Sears has offered proprietary store cards for 91 years of its 117-year history.

Citigroup is the largest credit card issuer in the United States. This transaction will increase its North American market dominance, adding more that 100 million active accounts to its portfolio.

Citigroup was one of several possible buyers negotiating for the Sears portfolio. The deal is expected to be complete by the end of 2003.

Sears will use the infusion of after-tax cash from the sale to pay off debt, pay dividends to shareholders as well as for corporate purposes. The company expects to have between $4 billion and $4.5 billion available for those expenses.

Without the credit card business, Sears will be able to focus on various repositioning efforts under way in the retail sector. Plans include scaling back on its "softer side" approach and instead strengthening the more traditional lines of tools, appliances and apparel that have been successful revenue generators for the company recently and in the past.