V) mervyn deal info

1 TGT Mervyn 1.txt BN Page 07/29 Target to Sell Mervyn's Chain for $1.65 Billion (Update3) of Target to Sell Mervyn's Chain for $1.65 Billion (Update3) (Adds analyst comment in fourth paragraph.) By Greg Wiles July 29 (Bloomberg) Target Corp., the No U.S discount chain, said it will sell its Mervyn's department store business to an investment group for $1.65 billion in cash as part of a plan to focus on its faster-growing discount stores Mervyn's 257 stores in 13 states are being purchased by a group that includes Sun Capital Partners Inc., Cerberus Capital Management LP, and Lubert-Adler/Klaff Partners LP The sale will fulfill Target's plan to sell its department store chains to concentrate on its 1,270 discount stores, which face increasing competition from others, including the world's largest retailer, Wal-Mart Stores Inc Last month, Target agreed to sell its Marshall Field's and nine Mervyn's locations to May Department Stores Co for $3.24 billion Target is ``now basically a discount store operation, period,'' said Kurt Barnard, president of Retail Forecasting LLC in Upper Montclair, New Jersey ``Their time, effort and investments will no longer go to other extraneous forms of retailing.'' Last year, sales shrank percent at Marshall Field's and dropped 6.9 percent at Mervyn's The Target chain's sales rose 12 percent Target estimated that the sale, which is subject to regulatory approvals, will result in a gain of 18 cents a share in the third quarter Target will use the money to reduce debt and repurchase shares, spokeswoman Cathy Wright said The retailer also will sell the credit card receivables of Mervyn's for about $475 million to General Electric Co.'s consumer finance unit, Minneapolis-based Target said in a statement Ongoing Operation Michael Kalb, a principal with Sun Capital, said the new owners want to continue to run the company Diane Neal will remain as president of Mervyn's ``Our objective here is to solidify the business as an independent company and strengthen its current market position,'' Kalb said in an interview Operating Mervyn's profitably may require major changes, said George Whalin, president of Retail Management Consultants in San Marcos, California ``They're going to have to re-invent this company in a market that is fiercely competitive,'' Whalin said in an in interview ``Operating it as usual has not worked.'' -==================== -Copyright (c) 2004, Bloomberg, L P Page of Mervyn's, which advertises itself as having ``big brands at small prices,'' was founded in 1949 and purchased in 1978 by Dayton Hudson Corp., Target's predecessor company Mervyn's, which employs 27,000, had sales of $3.6 billion last year, Target said Page TGT Mervyn 1.txt New Opportunities Target Chief Executive Officer Robert Ulrich had resisted investor calls for selling the department stores until March, when the company said it was hiring Goldman Sachs Group Inc to review options for the businesses Mark Mandel, a Fulcrum Global Partners analyst, had estimated Mervyn's might bring in up to $2 billion if it was sold to a real estate or private investment firm The group wants to strengthen Mervyn's market position as well as look at new opportunities, the investment group said in a statement Sun Capital, based in Boca Raton, Florida, has investments in several retailers, including the Sam Goody, SunCoast, Anchor Blue and Wickes Furniture chains New York-based Cerebus and affiliates manage assets of more than $14 billion, while Lubert-Adler is based in Philadelphia Klaff Partners has headquarters in Chicago and makes real estate investments in retail businesses Shares of Target rose 30 cents to $44.33 at p.m in New York Stock Exchange composite trading The agreement was announced after the close of regular trading With reporting by Jessica Brice in San Francisco and Rachel Katz in Princeton Editors: Siler, Holdcraft, Siler Story illustration: For a history of Target's acquisitions and divestitures, see {TGT US CACS } For a series of Bloomberg functions highlighting Target, see {CNP 10522190114 } Press the Space bar to pause and the Go key to continue To contact the reporter of this story: Greg Wiles in San Francisco at (1) (415) 743-3518 or grwiles@bloomberg.net To contact the editor responsible for this story: Vince Bielski in New York at (1) (212) 318-2077 or vbielski@bloomberg.net [TAGINFO] Company news: MAY US CN TGT US CN -==================== -Copyright (c) 2004, Bloomberg, L P Page of 53815Z US CN 9047Z US CN GE US CN NI NI NI NI NI NI NI NI codes: US COS RET CONS CLO MNA MN Page TGT Mervyn 2.txt Page of PJE 07/30 TGT :No Fire Sale Here: Target Gets a Nice Price For Mervyn's Hot Comment July 30, 2004 Jeffrey P Klinefelter, Sr Research Analyst 612 303-5537, jeffrey.p.klinefelter@pjc.com Neely J.N Tamminga, Sr Research Analyst 612 303-1537, neely.j.tamminga@pjc.com Melissa A Mullikin, Research Analyst 612 303-6478, melissa.a.mullikin@pjc.com TGT 44.33 Target Corporation Outperform Consumer (TGT - $ 44.33) Volatility: Low No Fire Sale Here: Target Gets a Nice Price For Mervyn's KEY POINTS: * Yesterday evening, Target announced it had reached a definitive agreement to sell Mervyn's to an investment consortium for total consideration of $1.65B The Mervyn's retail unit, including 257 stores and distribution centers, is being purchased by a group of investors including Sun Capital, Cerberus Capital Management, Lubert-Adler/Klaff and Partners $475 million in Mervyn's credit card receivables will be sold to GE Consumer Finance * Our first blush reaction is that Target got a good price The sale includes $475 million in credit card receivables, so if we back that out, they received roughly $1.17 B for the retail portion At the time Target announced it would put Mervyn's up for sale, initial expectations were well below $1B, with many expecting that Target would have to liquidate the unit, rather than sell it as whole company Coming into June and July, we were thinking $1B would be a good price for the retail portion of Mervyn's, so nearly $1.2 B looks pretty good to us * The sale is expected to result in a gain in the range of $270M pre-tax, or approx $0.18/share in Q3 and -==================== -Page of dilutive to earnings by approx $0.04-$0.05 in Q4 * In June, TGT announced it had reached a deal to sell Marshall Page TGT Mervyn 2.txt Field's and Mervyn's stores to May Co for $3.2B That transaction is expected to result in an aftertax gain of $1B in Q2 or Q3, which is equivalent to slightly more than $1.00/share * We believe TGT will likely use the substantial influx of cash to increase shareholder value via share buybacks and debt repayments over the next several years When TGT announced the Field's deal, it also announced a new $3B share buyback program over the next 23 years Clearly, any share buyback activity will help offset the loss of revenue and earnings associated with the divested units In addition, TGT has stated it would like to maintain its current debt to cap ratio of roughly 45.0%45.5% As such, should TGT complete a $3B share buy back, it would need to pay down approximately $700M$900M in debt to maintain that ratio * While the loss of revenue and earnings associated with Marshall Field's and Mervyn's will likely be dilutive in the near term, given the rate at which it is adding new Target stores, it will be able to make up the loss in expense leverage within a year * Our price target of $49 is based on 21x FY05 EPS RISKS TO ACHIEVEMENT OF TARGET PRICE: Risk factors include increasing exposure to bad debt expense in credit operations and a downturn in the overall economic environment Piper Jaffray & Co does and seeks to business with companies covered in its research reports As a result, investors should be aware that the -==================== -Page of firm may have a conflict of interest that could affect the objectivity of this report Investors should consider this report as only a single factor in making their investment decisions.This report should be read in conjunction with important disclosure information, including an attestation under Regulation Analyst Certification, found at the end of this report or at the following site:http://www.piperjaffray.com/researchdisclosures Customers of Piper Jaffray in the United States can receive independent, third-party research on the company or companies covered in this report, at no cost to them, where such research is available Customers can access this independent research by visiting piperjaffray.com or can call 800 7475128 to request a copy of this research Page TGT Mervyn 3.txt Page DBR 07/30 DBRS Comments on Target Corporation's Sale of Mervyn's of DBRS Comments on Target Corporation's Sale of Mervyn's Industry : Merchandisers & Food Retailing Dino Galanis / 416-593-5577 x2258 / kgalanis@dbrs.com Jack Alvo / 416-593-5577 2290 / jalvo@dbrs.com Target Corporation ("Target" or the "Company") announced yesterday that it has reached a definitive agreement to sell its Mervyn's business unit to an investment consortium for aggregate consideration of approximately $1.65 billion in cash The transaction follows the June 9, 2004, announcement that Target had reached an agreement to sell its Marshall Field's business unit and nine Mervyn's stores to The May Department Stores Company for approximately $3.2 billion in cash Both transactions follow Target's March 10, 2004, announcement that it is reviewing strategic alternatives for both of these business units, which generated a combined 12%+ of F2004 consolidated revenues, but less than 8% of pre-tax segment profit The transaction announced yesterday was subject to regulatory approval, which is not expected to be problematic, and is expected to close in the third quarter of Target's fiscal year Under the terms of the agreement, Target is selling its Mervyn's retail subsidiary, including 257 Mervyn's stores and four distribution centres, to an investment consortium comprised of Sun Capital Partners, Cerberus Capital Management, and Lubert-Adler/Klaff Partners Additionally, the Company will sell approximately $475 million of Mervyn's credit card receivables to GE Consumer Finance The sale price is expected to result in a pre-tax gain of approximately $270 million and represents proceeds that are considerably higher than what had been expected DBRS expects the net proceeds from the Mervyn's sale will be used in a balanced manner both for debt reduction, and to help support the recently announced $3 billion share repurchase program, which should be completed over a two- to three-year period These expectations are in line with stated uses of cash following the June 2004 sale of Marshall Field's DBRS believes both transactions and the anticipated cash use are moderately credit positive due to the following factors: (1) Proceeds for both units have considerably exceeded expectations and will be used in part to help reduce debt levels (2) The divestment of these businesses will allow management to focus solely on the faster growing and much more profitable Target division DBRS is a Toronto-based, full-service credit rating agency established in 1976 Privately owned and operated without affiliation to any organization, DBRS is respected for its independent, third-party evaluations of corporate and government issues, spanning North America, Europe and Asia DBRS's extensive coverage of securitizations and structured finance transactions solidifies our standing as a leading provider of comprehensive, in-depth credit analysis -==================== -Page of Information contained herein is obtained by DBRS from sources believed by it to be accurate and reliable Due to the possibility of human or mechanical error as well as other factors, such information is provided "as is" without warranty of any kind and DBRS, in particular, makes no representation or warranty, express Page TGT Mervyn 3.txt or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any such information DBRS shall not be liable in contract, tort or otherwise for: (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of DBRS or any of its directors, officers, employees, independent contractors, or agents in connection with, or related to, obtaining, collecting, compiling, analyzing, interpreting, communicating, publishing or delivering any such information; or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including, without limitation, lost profits), even if DBRS is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information In addition to the foregoing, the rights of subscribers of DBRS are governed by the terms and conditions of the applicable Subscription Agreement In the event of any conflict between this document and the Subscription Agreement, the Subscription Agreement shall govern (without limitation, a conflict shall not include the failure of the Subscription Agreement to cover a matter covered herein) The credit ratings, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities Provider ID: 00143727 -0- (DBR) Jul/30/2004 20:03 GMT -==================== -############################ END OF STORY ############################## Page TGT Mervyn 4.txt PRN 09/02 Mervyn's Acquisition Completed Page of HAYWARD, Calif., Sept /PRNewswire/ The completion of the acquisition of Mervyn's from Target Corporation by an investor group consisting of Sun Capital Partners, Inc., Cerberus Capital Management, L.P., and Lubert-Adler and Klaff Partners, L.P was announced today Additionally, Mervyn's credit card receivables, totaling approximately $475 million, have been acquired by GE Consumer Finance, a unit of General Electric Company Mervyn's, a leading promotional neighborhood department store, will continue to operate 257 stores and four distribution centers in 13 states, primarily in the western and southwestern regions of the United States Based in the San Francisco Bay Area, Mervyn's will function as an independent company "Mervyn's has an opportunity to differentiate itself within the mid-level retail market," said Michael Kalb, a principal with Sun Capital "We want customers to leave the stores not only completely satisfied, but with money left in their pockets to take care of the other needs their families may have." "Mervyn's has made significant strides to elevate its brand by offering its guests an enhanced in-store experience, new merchandise, and exclusive celebrity partnerships," said Diane Neal, president of Mervyn's "Our investors bring an expertise and additional resources that will allow us to build on existing successes and take advantage of new opportunities." About Mervyn's Mervyn's LLC, headquartered in the San Francisco Bay Area, is a family-friendly promotional neighborhood department store offering trend-right fashions and home decor for the entire family at affordable prices With 257 locations in 13 states, Mervyn's has a well-earned reputation for its extensive selection of national and private-label fashions and housewares Community giving has been a cornerstone of the company's business since 1949, with a focus on improving the lives of children and families by giving back to educational programs in its communities For a list of store locations, or for additional information, visit Mervyn's website at http://www.mervyns.com About Sun Capital Partners, Inc Sun Capital Partners, Inc is a leading private investment firm focused on investments in market leading companies Sun Capital has invested in approximately 70 companies with combined sales in excess of $9.0 billion In addition, Sun Capital has more than $1 billion of capital under management Sun Capital has extensive retail investments including Sam Goody, SunCoast, Media Play, Anchor Blue, MOST, Wickes Furniture, Bruegger's Bagels, Nationwide Mattress and Furniture Warehouse and The Mattress Firm For more information about Sun Capital, visit http://www.SunCapPart.com About Cerberus Capital Management, L.P Headquartered in New York City, Cerberus Capital Management, L.P and its affiliated entities manage funds and accounts with capital in excess of $14 billion Recent acquisitions by Cerberus and its affiliated companies include Teleglobe, Alamo and National Car Rental, Fila Sportswear and Aozora Bank in -==================== -Page of Tokyo About Lubert-Adler and Klaff Partners, L.P Lubert-Adler manages four real estate funds with $2.5 billion in equity capital and $7.0 billion in total assets under management Investors in the fund include leading endowments and pension funds Through its joint venture Page TGT Mervyn 4.txt with Klaff, Lubert-Adler seeks to make real estate investments in retail businesses, as well as other value added situations Lubert-Adler is headquartered in Philadelphia, with an office in Los Angeles; Klaff is headquartered in Chicago Acadia Realty Trust, through its affiliates, has joined as an investor through Lubert Adler and Klaff Partners, L.P SOURCE Mervyn's LLC -009/02/2004 /CONTACT: Greg Terk of Mervyn's LLC, +1-510-727-2634/ /Web site: http://www.SunCapPart.com http://www.mervyns.com / CO: ST: IN: SU: -0- Mervyn's LLC; Sun Capital Partners, Inc.; Cerberus Capital Management, L.P.; Lubert-Adler and Klaff Partners, L.P.; Target Corporation California REA TNM (PRN) Sep/02/2004 18:10 GMT -==================== -############################ END OF STORY ############################## Page TGT Mervyn 5.txt PRN 09/02 Target Corporation Completes Sale of Mervyn's Page of MINNEAPOLIS, Sept /PRNewswire-FirstCall/ Target Corporation (NYSE: TGT) announced today that it has completed the sale of its Mervyn's retail subsidiary to an investment consortium including Sun Capital Partners, Inc., Cerberus Capital Management, L.P., Lubert-Adler and Klaff Partners, L.P., and completed the sale of Mervyn's credit card receivables to GE Consumer Finance, a unit of General Electric Company The aggregate consideration of these transactions was approximately $1.65 billion in cash Mervyn's is a promotional, middle-market department store with 257 stores in 13 states, primarily in the west and south In 2003, Mervyn's generated $3.6 billion in revenue and $160 million in pretax segment profit Mervyn's will continue to operate from its headquarters in Hayward, California Following the sale of Mervyn's, Target Corporation will continue to operate Target Stores, a large-store, general-merchandise, discount format currently consisting of 1,272 stores in 47 states, as well as an on-line business called Target.com Target Corporation news releases are available at http://www.target.com or http://www.prnewswire.com SOURCE Target Corporation -009/02/2004 /CONTACT: investors, Susan Kahn, +1-612-761-6735, or financial media, Cathy Wright, +1-847-615-1538, or media, Carolyn Brookter, +1-612-696-6557, all of Target Corporation/ /Web site: http://www.target.com / (TGT) CO: ST: IN: SU: -0- Target Corporation; Sun Capital Partners, Inc.; Cerberus Capital Management, L.P.; Lubert-Adler and Klaff Partners, L.P.; GE Consumer Finance; General Electric Company; Mervyn's Minnesota, California REA TNM (PRN) Sep/02/2004 17:32 GMT -==================== -############################ END OF STORY ############################## Page 10 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) September 2, 2004 Target Corporation (Exact name of registrant as specified in its charter) Minnesota 1-6049 41-0215170 (State or other jurisdiction (Commission File (IRS Employer of incorporation) Number) Identification No.) 1000 Nicollet Mall 55403 Minneapolis, Minnesota (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code (612) 304-6073 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below): o o o o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12) Pre-commencement communications pursuant to Rule 14d -2(b) under the Exchange Act (17 CFR 240.14d-2(b)) Pre-commencement communications pursuant to Rule 13e -4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 8.01 Other Events On September 2, 2004, Target Corporation announced that it has completed the sale of its Mervyn’s business unit and related credit card receivables for an aggregate consideration of approximately $1.65 billion in cash An additional discussion of the transactions is provided in Target Corporation’s news release of September 2, 2004, which is attached as an exhibit to this report A copy of the equity purchase agreement is incorporated by reference in this report Item 9.01 Financial Statements and Exhibits (c) Exhibits Equity Purchase Agreement dated as of July 29, 2004 (exhibits and schedules omitted) (Incorporated by reference to Exhibit of Registrant’s current report on Form 8-K filed on July 30, 2004.) 99 News release dated September 2, 2004 SIGNATURES  2005 EDGAR Online, Inc 11 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized Date: September 2, 2004 TARGET CORPORATION /s/ Douglas A Scovanner Douglas A Scovanner Executive Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit 99 Description Method of Filing Equity Purchase Agreement dated as of July 29, 2004 (exhibits and schedules omitted) News release dated September 2, 2004 Incorporated by Reference Filed Electronically Exhibit 99 FOR IMMEDIATE RELEASE Contact: Susan Kahn (investor) 612-761-6735 Cathy Wright (financial media) 847-615-1538 Carolyn Brookter (media) 612-696-6557 TARGET CORPORATION COMPLETES SALE OF MERVYN’S MINNEAPOLIS, September 2, 2004 — Target Corporation announced today that it has completed the sale of its Mervyn’s retail subsidiary to an investment consortium including Sun Capital Partners, Inc., Cerberus Capital Management, L.P., Lubert-Adler and Klaff Partners, L.P., and completed the sale of Mervyn’s credit card receivables to GE Consumer Finance, a unit of General Electric Company The aggregate consideration of these transactions was approximately $1.65 billion in cash Mervyn’s is a promotional, middle-market department store with 257 stores in 13 states, primarily in the west and south In 2003, Mervyn’s generated $3.6 billion in revenue and $160 million in pretax segment profit Mervyn’s will continue to operate from its headquarters in Hayward, California Following the sale of Mervyn’s, Target Corporation will continue to operate Target Stores, a large-store, general-merchandise, discount format currently consisting of 1,272 stores in 47 states, as well as an on-line business called Target.com Target Corporation news releases are available at www.target.com or www.prnewswire.com ### End of Filing  2005 EDGAR Online, Inc 12