Dick’s Sporting Goods to Buy Foot Locker for $2.4 Billion

Dick's Sporting Goods Inc. has reached a $2.4 billion deal to acquire Foot Locker Inc., combining two retailers troubled by President Donald Trump's tariff wars.

Dick’s will pay $24 a share for Foot Locker, reflecting a premium of 87% on the closing share price on Wednesday, before news of the deal emerged. Shareholders in Foot Locker can also elect to receive Dick’s shares instead of cash.

The transaction implies an equity value of $2.4 billion and an enterprise value of $2.5 billion, the two companies said in a statement.

Shares in Foot Locker surged 82% at 9:45 a.m. in Thursday trading in New York. Meanwhile, Dick’s Sporting Goods fell as much as 14% on the back of the company’s largest acquisition. Bloomberg Intelligence's Lindsay Dutch reports.

While both chains rely heavily on selling sneakers, the acquisition would bring together two companies with vastly different business models. Foot Locker is a 2,400-store chain made up of mostly smaller, mall-based locations in 20 countries, whereas Dick’s is comprised of roughly 800 big-box stores in suburbs across the US.

The deal will change Dick’s profile significantly, giving the company a lot more exposure to mall-based retail and international locations. Adding $8 billion of revenue, or about 60% of Dick’s sales, has the potential to ratchet up the big-box retailer’s market power and negotiating muscle at a time when supply chain challenges loom large.

“By combining with Foot Locker, Dick’s will be poised to serve consumers not only in new locations in the U.S. through Foot Locker’s complementary real estate portfolio, but also internationally for the first time,” the company said. “With strong long-term industry tailwinds, the combined company is well positioned for long-term growth.”

Dick’s said Thursday that it expects to operate Foot Locker as a standalone business unit within its portfolio and maintain the Foot Locker brands.

Dick’s cited Nike Inc.’s evolving relationship with Foot Locker as another reason for the deal. Nike under new CEO Elliott Hill is returning to the wholesale channel in a greater way after an earlier focus on direct-to-consumer sales fizzled.

“Foot Locker is going to be a beneficiary of that move back,” said Executive Chairman Ed Stack on a call with analysts, “And so we think the timing of this is perfect.” Dick’s expects Nike to “be able to sell more product at full price,” he added.

Trade War

Both companies have been under pressure from Trump’s trade war, as many of the goods they sell, from brands such as Nike and Adidas, are made abroad in production hubs such as China and Vietnam.

Dick’s Chief Executive Officer Lauren Hobart has overseen efforts to improve the retailer’s e-commerce capabilities and also invest in its physical stores. But the company’s sales growth has tapered off in the two most recent quarters.

The tariffs — and weakening consumer sentiment — have hit retailers across the board, as price hikes and shopper pullback have rippled across the industry. That’s made it challenging for specialty retailers to hold their own, as signified by the recent take-private deal of Skecher’s Inc.

While Foot Locker Chief Executive Officer Mary Dillon had pledged to reach $9.5 billion in annual sales by 2026, progress stalled after US shoppers began pulling back discretionary spending.

Under Dillon, Foot Locker renovated a large portion of its store network, bolstered its rewards program and mended a frayed relationship with Nike, but the company’s revenue still fell for the third year in a row to less than $8 billion.

A tie-up with Dick’s means the company doesn’t have to confront worsening retail trends alone.

“I am confident this transaction represents the best path for our shareholders and other stakeholders,” Dillon said, noting that joining forces with Dick’s will help it expand faster.

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