Shares in

Dillard's

(DDS) - Get Report

rose in premarket trading Monday after the retailer agreed to sell its credit card operations to

General Electric's

(GE) - Get Report

consumer finance unit for about $1.25 billion.

Under terms of the deal announced Sunday, GE agreed to purchase all of the assets of Dillard National Bank, the private label credit card issuing bank of the retailer.

The deal also includes an agreement by the two companies to form a long-term marketing and servicing alliance that will provide credit marketing and analytic support, credit servicing and customer care for Dillard's 5.5 million cardholders. The two companies will share income generated by the alliance.

The transaction includes the assumption of $400 million of securitization liabilities, the purchase of owned accounts receivable and an undisclosed premium.

Dillard's private-label program is the sixth-largest in-house card program in the United States. The company joins

Sears, Roebuck

(S) - Get Report

and other major retailers in selling its credit card operations.

The Arkansas-based Dillard's said the agreement provides its customers "expanded financing options supported by consistent, customer-friendly account servicing."

Dillard's expects the transaction to be accretive to 2005 earnings and will partly use the proceeds to pay down debt and repurchase shares.

Dillard's shares gained 28 cents, or 1.3%, to $22.25 early Monday. GE shares closed at $31.52 Friday.