Costco Credit Cards …..Citigroup Inc. has announced that it has reached a deal for the acquisition of Costco Wholesale Corp.’s co-branded credit-card business from American Express Co.
It is thought that the sale will be concluded by June this year. At that time every eligible Costco American Express Card customer will have their account transferred to Citi, writes Tess Stynes for The Wall Street Journal.
Costco Credit Cards – Citi takes Costco business after AmEx fails to agree new deal
The company published a press release on Monday, but no financial details of the deal were provided. The deal came about after American Express and Costco announced the end of their 16-year relationship last year.
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American Express received a lot of extra business as a result of the deal, but the two companies could not agree on a new deal. The loss of the contract is a blow to AmEx, which was struggling to hit internal sales targets.
Citi and Visa Inc. won the contract, which was subject to heavy competition. As a result of the deal Costco customers will be able to pay with a much wider range of plastic than before, after more than a decade of an the exclusive deal with AmEx.
Costco Credit Cards – Buffett standing by AmEx despite recent problems
Citi revealed that it plans to issue the first round of Costco credit cards when the deal is finalized. It is not thought that 2016 earnings will be affected by the deal. On the other hand American Express could receive as much as $1 billion as a result of the deal.
AmEx also recently lost a deal with JetBlue and was subject to an antitrust lawsuit from the Department of Justice. Warren Buffett, the largest shareholder in AmEx, told a CNBC interviewer that losing Costco was a “big deal.”
A viewer sent in a question asking why Buffett’s company Berkshire Hathaway was still invested in AmEx, to which Buffett responded that it was a strong brand with a great reputation. However he acknowledged that it would face a lot of competition in the future.
Shareholders will be pleased to hear that Buffett is not thinking of selling up. The influential investor could have caused major panic if he had written off the brand.