NEW YORK — Target Corp. is selling its Mervyn’s division in two separate transactions for a total of $1.65 billion in cash.

The price tag is about 10 times Mervyn’s pretax profits of $160 million. The deal is expected to close in the third quarter.

As reported in WWD on Wednesday, a group of investors led by Sun Capital Partners Inc. and Cerberus Capital Management LP is buying Mervyn’s retail operations for $1.2 billion in cash.

In a statement released late Thursday, well after the market closed, Target also named Lubert-Adler/Klaff and Partners LP as part of the “investment consortium” buying the nameplate, which it describes as a “promotional, middle-market department store.”

In a separate transaction, Target is selling $475 million of Mervyn’s credit card receivables to GE Consumer Finance. The retailer said Mervyn’s would operate as an independent company.

Sun Capital and Cerberus could not be reached for comment. Target referred media inquiries to a prerecorded call on its Web site, which said the deal is expected to add a pretax gain of $270 million, or 18 cents a share, to Target’s bottom line.

“Due to the seasonality of Mervyn’s earnings, the sales of this division is expected to be dilutive to Target Corp. by about 4 to 5 cents in the fourth quarter of this year,” the retailer said.

Mervyn’s is based in Hayward, Calif., and operates 257 stores in 13 states, mostly in the West and South. Mervyn’s sales for 2003 were $3.6 billion. The deal to the investment group includes Mervyn’s distribution centers.

Bob Ulrich, chairman and chief executive officer of Target Corp., said in a statement that he believes “the sale of Mervyn’s as an ongoing business reflects our long-term commitment to create substantial value for our shareholders over time and enhances the opportunity for all of our stakeholders.”

For Sun Capital Partners, this deal extends the investment firm’s reach into the retail industry. Prior acquisitions for Sun Capital include companies such as Sam Goody, SunCoast, Media Play, Anchor Blue and Wicke’s Furniture.

Cerberus is considered a vulture fund, which has been making investments in distressed companies. Last year the firm bought Fila. Cerberus also bought or financed troubled companies such as specialty retailer G&G, textile supplier Guilford Mills and intimate apparel retailer Frederick’s of Hollywood.

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