Citigroup has acquired the Federated credit card portfolio. This phase of the acquisition is the second of two transactions in the purchase of The May Department Stores Company credit card receivables from Federated Department Stores. The purchase price of this final transaction included an 11.5% premium on Federated receivables under management of approximately $950 million at closing and follows the initial purchase of more than $800 million in managed receivables in May.
Under Citigroup and Federated's long-term agreement, the companies will partner to manage Federated's credit card business, including existing and new accounts. The Federated and May credit card portfolios comprise a total of approximately 18 million active accounts and receivables under management of approximately $6.4 billion at closing. Citigroup paid a premium of approximately 11.5% to acquire each of the portfolios.
The completion of the Federated credit card portfolio acquisition solidifies Citigroup's standing as the largest retail partner credit card issuer, featuring relationships with industry-leading retail brands such as Sears, The Home Depot, Shell, ConocoPhillips, Dell and other major companies. The acquisition also strengthens Citigroup's number one global card market position, increasing its portfolio to more than 157 million cards in 46 countries worldwide.
Vik Atal, Chairman and Chief Executive Officer of Citi Cards, said: "Citigroup is the global industry leader in retail partner credit cards and we are pleased to complete this phase of our agreement with Federated. We look forward to providing exceptional value to Federated and May credit card customers. This relationship reinforces our objective to be the 'partner of choice' by delivering significant value to leading business partners who strive to enhance customer relationships, while allowing them to focus on what they do best. We look forward to applying our innovative, world-class capabilities to ensure the ongoing success of the Federated and May retail partner programs and drive growth and revenues within each of our respective businesses."
Citi said that there would be no immediate changes to the Federated card programs or operations. Customers will be provided with world-class customer service and can expect to receive the same features and benefits that they now enjoy. They should continue to use their cards in the same manner they do today.
