Foot Locker (FL) stock skyrocketed 82.91% in pre-market trading on Thursday following the announcement that Dick's Sporting Goods (DKS) has agreed to acquire the footwear retailer for $2.4 billion. The deal, which is set to create a global leader in the sports retail industry, represents a significant premium for Foot Locker shareholders and has sent shockwaves through the market.
Under the terms of the agreement, Foot Locker shareholders will receive either $24.00 in cash or 0.1168 shares of Dick's common stock for each share of Foot Locker common stock they own. This offer price represents a substantial 86% premium to Foot Locker's last closing price of $12.87 on Wednesday. The transaction implies an equity value of approximately $2.4 billion and an enterprise value of about $2.5 billion for Foot Locker.
The acquisition is expected to close in the second half of 2025, subject to Foot Locker shareholder approval and other customary conditions. Dick's Sporting Goods anticipates that the deal will be accretive to its earnings per share in the first full fiscal year post-close and is expected to deliver cost synergies of $100-$125 million. This strategic move will allow Dick's to consolidate its market share in the footwear space and expand its store footprint, giving the combined company greater scale to negotiate with vendors and landlords.
The news comes at a time when Foot Locker has been facing challenges, with its stock down 41% over the past year prior to this announcement. The company recently reported preliminary first-quarter results, including a 2.6% decrease in comparable sales and a net loss of $363 million. In light of the pending acquisition, Foot Locker has stated that it will not be providing or updating previously issued financial guidance.
As the sports retail landscape continues to evolve, this merger between two major players is likely to have significant implications for the industry. Investors and analysts will be closely watching how the combined entity navigates the challenges of integrating operations and capitalizing on potential synergies in the competitive sportswear market.
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