Target ( TGT) has already waved goodbye to Marshall Field's. Now it's saying, "so long" to Mervyn's.

The department store company announced on Thursday that it has agreed to sell off what's left of its struggling Mervyn's unit to a group of investors for about $1.65 billion in cash. Included in the sale are 257 stores in 13 states, four distribution centers and $475 million worth of credit card receivables.

Among the investors are Sun Capital Partners, Cerberus Capital Management and Lubert-Adler/Klaff and Partners. General Electric's ( GE) consumer finance division is buying Mervyn's credit card accounts.

"We believe that the sale of Mervyn's as an ongoing business reflects our long-term commitment to create substantial value for our shareholders over time," said Target CFO Doug Scovanner on a prerecorded call.

Target did not give a specific time frame for the close of the deal, indicating only that it expected to finalize the deal in its fiscal third quarter. The deal is subject to regulatory review, according to the company, and Target expects the agreement to be finalized soon after regulators approve it.

The retail giant expects the sale to result in a pretax gain of $270 million, or 18 cents per share, in its third quarter.

The transaction will not immediately result in any layoffs, Scovanner said. Instead, the investors plan to offer continued employment to all 27,000 Mervyn's employees. As part of the deal, the investors agreed to offer severance to any Mervyn's workers they lay off after the close of the deal.

Last month, Target agreed to sell its Marshall Field's chain and its nine Mervyn's stores located in Minnesota to May Department Stores ( MAY). Both Marshall Field's and Mervyn's had been underperforming for years, and many investors had felt that their poor performance was weighing heavily on Target's stock.

Target's announcement came after the bell on Thursday. In after-hours trading, the company's stock rose 19 cents, or 0.4%, to $44.52. Earlier in the day, the company's shares closed regular trading up 30 cents, or 0.7%, to $44.33.

Sun Capital has made a name for itself by purchasing struggling retail chains. Last year, the investment group, which has about $1 billion under management, bought Best Buy's ( BBY) Musicland operations.

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