Canadian Tire reacquires Scotiabank’s 20% stake in its financial services arm in $650m deal
Canadian Tire has bought back Scotiabank’s 20% stake in its financial services arm, CTFS, through an all-cash transaction valued at around $650 million (CAD 895 million), with $290 million (CAD 400 million) of this figure being supplemented by an 18-month term loan from Desjardins Capital Markets.
Canadian Tire buys back Scotiabank’s 20% stake in FS arm
CTFS primarily operates as Canadian Tire Bank, which is based in Oakville, Ontario, and is used by the retail chain to market its Triangle credit card portfolio and rewards programme.
Scotiabank first bought its 20% stake in May 2014, which it initially purchased for $460 million (CAD 500 million at the time) as part of a strategic partnership between the two companies.
Since then, the number of credit card holders is thought to have increased from 1.8 million to 2.3 million.
Greg Hicks, the corporation’s president and CEO, says the buy-back will “expedite key elements of our Triangle rewards strategy”, which he adds will enable it to “stay relevant to customers’ changing needs” as well as to “expand our credit card programme”.
Although the partnership between Canadian Tire and Scotiabank is set to be concluded, the bank will continue providing a committed credit facility of $800 million (CAD 1.1 billion) to the financial services arm for the next 18 months.
To assess “strategic alternatives” for the arm, the corporation has enlisted Goldman Sachs as its financial advisor for the subsequent year.
