NEW YORK: Dick’s Sporting Goods has agreed to buy smaller rival Foot Locker for $2.4 billion in a deal that sent Foot Locker shares soaring while dragging down Dick’s stock, the companies announced Thursday.
Foot Locker’s stock surged 75% to $22.50 in premarket trading following the news, while Dick’s shares fell 9%. The offer of $24 per share represents an 86% premium over Foot Locker’s last closing price. The struggling athletic retailer has lost roughly 40% of its value this year amid declining sales and increased competition.
The acquisition comes just days after private equity firm 3G Capital struck a $9.42 billion deal to buy Skechers, signaling a wave of consolidation in the retail sector as companies grapple with shifting consumer demand and economic uncertainty.
The Wall Street Journal first reported the potential Foot Locker deal late Wednesday after markets closed.
ANALYSIS: What the Deal Means for the Future
The Dick’s-Foot Locker merger highlights the growing pressure on traditional retailers to consolidate in order to compete with e-commerce giants like Amazon and direct-to-consumer brands such as Nike and Adidas. By absorbing Foot Locker, Dick’s gains a stronger foothold in the sneaker market while eliminating a competitor.
However, challenges remain. Both retailers have faced declining mall traffic and weakening sales in recent quarters. Integrating Foot Locker’s operations could prove costly, and Dick’s will need to streamline its expanded store footprint to avoid overlap.
Industry experts suggest more mergers could be on the horizon as retailers seek scale to survive in an increasingly digital and discount-driven marketplace. With global trade tensions and inflation weighing on consumer spending, further consolidation may be inevitable.