Business
Dick’s Sporting Goods acquires Foot Locker for 2.5 billion dollars – strategic expansion abroad
Dick's Sporting Goods acquires Foot Locker, strengthens international presence, and doubles revenue in the footwear segment.
Foot Locker enters the history of two US retail giants: Dick's Sporting Goods acquires the sporting goods retailer for $2.5 billion, focusing on a sustainable expansion of its business model – for the first time with an international focus.
Foot Locker's stock soared 82 percent on Thursday after the company announced its acquisition by Dick’s.
With approximately 2,400 stores in 20 countries, Foot Locker generated sales of about eight billion dollars last year. For Dick’s, previously represented with 850 stores exclusively in the USA, the acquisition marks a decisive step into the international market.
Analysts see the transaction as a double-edged sword. TD Cowen downgraded Dick's to "Hold" and lowered the price target from $245 to $216. The increased reliance on Nike products—which will account for 38 percent of the range instead of the previous 24 percent—could put Dick's under pressure from more agile sneaker specialists. Competition with smaller and digitally oriented retailers will also intensify, according to analyst John Kernan.
Nevertheless, some experts see long-term potential. Truist analyst Joseph Civello maintains a buy recommendation, emphasizing that Dick's could strengthen its position against sports apparel and shoe manufacturers with the significantly expanded customer base and the doubling of sales in the shoe segment.
Foot Locker shareholders have the choice to receive the payout in cash - $24 per share - or alternatively to receive 0.1168 shares of the new merged company. Foot Locker shares lost over 40 percent in value last year and were recently trading below $12.
The two companies expect cost savings of between $100 and $125 million in the medium term by pooling purchasing and procurement. Additionally, the deal is expected to increase earnings per share in the first full fiscal year after closing, adjusted for one-time costs.
The acquisition takes place in an environment of global uncertainty, marked by inflationary pressure and trade conflicts that particularly dampen sneaker sales. Nike, as a major supplier to both retailers, is also under pressure from competition and production shifts.
Dick's ambitious with this step to take a leading position in global sporting goods retail – a bold move that will sustainably change the company's profile.
