Marketing Analysis : Selling Target 's Credit Card Business Essay

960 Words Oct 22nd, 2015 4 Pages
In the summer of 2007, William Ackman Attained 9.6% of Target’s outstanding shares. As an activist shareholder, William Ackman had a goal to work with Target’s management and bring up their share price while also working to get on the board of directors. There were three critical changes Ackman wanted to bring about Target’s operations: selling Target 's credit card business, increasing its stock buyback program, and selling a portion of their real estate holdings. With those three changes, Ackman believed from his past experiences, he could help Target increase their valuation.
Credit Card Sales
Target initially claimed that its credit card business continued to be highly profitable. While accounts receivables that were due by over 60 days continued to grow starting in 2006, Target claimed they were still interested in not exiting their credit card business. Eventually in 2008, they announced they had made a deal with J.P. Morgan Chase to sell 47% of their credit card portfolio for $3.6 Billion. During the recession, conditions for Target’s credit card business were not favorable as their operations related to such business consistently struggled. During this time, Target believed that the situation would turn around as the number of individuals who were behind on their payments started decreasing. However, Ackman continually insisted on Target to sell their segment of business related to credit cards.
By getting rid of credit card business, Target’s financial statements…

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