Barclays has agreed to acquire Discover’s UK credit card business, Goldfish, for about £35 million in cash.
Goldfish has about 1.7 million customers with approximately £2.0 billion of debt. But the business has been suffering as credit quality in the UK has deteriorated, forcing Goldfish to lose nearly $600 million last year.
Under the terms of the deal Barclays will also acquire the Goldfish brand; its operating facilities, staff and certain legal entities.
Barclays said that it would integrate the business into its own credit card division, Barclaycard.
Antony Jenkins, the chief executive of Barclaycard, said: “Discover’s UK credit card business has similar credit characteristics to our existing UK business. The combination provides an attractive opportunity to deploy our expertise across a larger number of cards and customers.”
Advertisement
The Goldfish brand was launched in 1996 by Centrica and subsequently acquired by British Gas and Lloyds TSB in a joint venture. Lloyds bought out British Gas in 2003.
It changed hands again in 2006, when it was acquired by Morgan Stanley, the US investment bank, which had grand plans to revitalise the weary brand. However, those relaunch plans were put on hold after the American bank announced it was to spin off its credit card business into Discover Financial Services.
Discover Financial Services, which is listed on the New York Stock Exchange, said today that it expects to record charges of between $190 million and $210 million in the first quarter stemming from the sale.
“While we have begun to see important progress in our UK business, the funding and operating environment there continues to be a challenge. We have concluded that the best way to maximize shareholder value is through the sale of the Goldfish business,” David Nelms, the chief executive officer of Discover, said.
“The sale will free up capital, enhance Discover’s net income and bring even sharper focus to our profitable and growing US Card and Third-Party Payments businesses.”
Advertisement
Discover said that the money raised from the sale would be put towards general corporate purposes.
The companies said that they expect to complete the deal, which is subject to regulatory approval, in the first half of 2008.