TD Bank Group seeks to replace CIBC as Aeroplan partner
TORONTO, June 27 (Reuters) - TD Bank Group said on Thursday it has agreed to become the primary credit card issuer for Aeroplan, a loyalty program owned by Aimia, which could end rival CIBC's long-standing partnership with Aimia.
The conditional agreement, to take effect Jan. 1, 2014, would let TD issue a suite of co-branded Aeroplan credit cards. The bank said the deal would have no impact on 2014 earnings, but would make a "solid contribution" to its earnings in 2015.
But CIBC, Aeroplan's current partner, has until Aug. 9 to match the terms of the TD-Aimia agreement and scuttle the deal. If that happens, TD is entitled to a break fee of C$80 million.
As part of the agreement, TD would make an up-front payment of C$100 million ($95.50 million) and commit to minimum annual miles purchases for the first three years.
Aimia said in a statement that the deal with TD would bring improved growth and strong free cash flow generation over the longer term. It said it was also in talks to further expand its program through American Express.
CIBC expressed objections to the TD-Aimia partnership, and indicated that still expects to renew its agreement with Aimia.