Sears Canada Inc. has entered into an agreement to sell its credit and financial services business to global financial services giant JPMorgan Chase & Co.

Back in June 2005, Sears Canada said it was evaluating strategic alternatives for the business, including its possible sale, to focus on its merchandising business.

The business includes 10 million total accounts. This portfolio represents the third largest in the country, and includes the largest in-house private label portfolio.

Both the Sears Card and Sears MasterCard will continue to be offered through JPMorgan Chase and the transition will be transparent to Sears customers.

“This purchase offers many opportunities for Chase including partnering with another of the world’s leading brands, expanding our private-label business and entering a new and exciting market in Canada,” said William Campbell, chairman, Chase Card Services, in a release. “We look forward to working closely with Sears Canada and its employees to offer great products and services that consumers find valuable.”

The transaction has been approved by both companies and is expected to close by year-end 2005, subject to regulatory approvals and closing conditions.

Upon completion of the deal, JPMorgan Chase will acquire substantially all of the assets and liabilities of Sears Credit and Financial Services business, including the business, assets and liabilities of Sears Canada Bank.

It is anticipated that substantially all of the approximately 1,000 employees of the business, including those performing Sears Canada’s responsibilities as servicer, will become employees of JPMorgan Chase.

As part of the transaction, Sears Canada and JPMorgan Chase will also enter into a long-term marketing and servicing alliance with an initial term of 10 years.

Subject to the approval of holders of SCORE Trust’s senior and subordinated notes, the relevant rating agencies and other regulatory bodies, the transaction will result in JPMorgan Chase or one of its affiliates becoming the issuer of the Sears Card and the seller and servicer of the Sears credit card receivables.

SCORE Trust is a securitization vehicle, which acquires undivided co-ownership interests in a pool of credit card receivables generated by the Sears Card.