United States retailer DICK'S Sporting Goods has entered into an agreement to purchase Foot Locker for US$2.5 billion.
Foot Locker, known for its sneaker culture and expertise comes with a portfolio that includes Foot Locker, Kids Foot Locker, Champs Sports, WSS and atmos.
In 2024, it counted its global reach to cover 2,400 retail stores across 20 countries and had net worldwide sales of $8 billion.
DICK'S says it plans to operate Foot Locker as a standalone business unit within its portfolio, while maintaining the current Foot Locker brands.
President and CEO of DICK’S Lauren Hobart said the merger was an opportunity to amplify Foot Locker's expertise.
“Sports and sports culture continue to be incredibly powerful, and with this acquisition, we'll create a new global platform that serves those ever-evolving needs through iconic concepts consumers know and love.”
DICK'S expects the transaction to be accretive to earnings per share (EPS) in the first full fiscal year post-close and deliver $100-$125 million in cost synergies through procurement and sourcing efficiencies.
Foot Locker chief executive Mary Dillon was excited by the merger and the opportunity it brings to its already successful and globally recognised business.
“By joining forces with DICK'S, Foot Locker will be even better positioned to expand sneaker culture, elevate the omnichannel experience for our customers and brand partners, and enhance our position in the industry."
Under the merger terms, Foot Locker shareholders can elect to receive either $24 in cash or 0.1168 shares of DICK'S common stock per share - a 66% premium to Foot Locker's 60-day V-WAP.
DICK'S plans to finance the acquisition through cash-on-hand and new debt, with the transaction expected to close in the second half of 2025.
Hobart said the sporting goods company said it's well-positioned for the acquisition, with Q1 sales growth of 4.5% representing EPS of $3.37.
“We are very pleased with our strong start to the year and our demonstrated sustained growth,” Hobart said.
“The strength of our business puts us in a great position for our proposed acquisition of Foot Locker - a transformative step to accelerate our global reach and drive significant value for our athletes, teammates, partners and shareholders.”
Its share price took a tumble on the news, falling 14.59% to trade at $179.02 per share in after-hours trade.