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Sears will sell its credit division to Citigroup, a New York financial services company that also handles Home Depot's private-label credit card. The deal will bring some much-needed capital to Sears and strengthen Citibank's position as the nation's largest credit card manager.
Citibank will pay $32 billion for a receivables portfolio of $29 billion, leaving Sears with $3 billion in cash. In addition, Sears will retain $3 billion in invested capital.
As part of its 10-year strategic alliance, Citibank will pay Sears approximately $200 million a year to generate new accounts and credit-card sales. Sears will also realize an annual savings of more than $200 …