Overview of the Deal
Acquirer: Dick’s Sporting Goods (NYSE: DKS)
Target: Foot Locker (NYSE: FL)
Total Transaction Value: $2.4B
Expected Closing Date: Q3 2025
Acquirer Advisors: Goldman Sachs (Financial), Lipton Rosen & Katz (Legal)
Target Advisors: Evercore (Financial), Skadden Arps Slate Meagher & Flom LLP (Legal)
On May 15, 2025, Dicks and Foot Locker announced they have come under an agreement in which Dicks will acquire Foot Locker for $2.4 billion. This deal offers $24.00 per share, roughly a 66% premium to Foot Locker’s 60-day trading average. The valuation of this deal is 6.1x EV/EBITDA based on Foot Locker’s approximate 2024 EBITDA of $410 million. This multiple is lower than the average range observed in the athletic apparel and retail industry of 6x – 12x.
Foot Locker is expected to operate as a standalone business unit within Dick’s portfolio, maintaining the brand. The strategic move aims to expand Dick’s established U.S.-based platform globally within the growing retail sports industry. This will allow Dicks to serve a broader set of consumers, including athletes and sneakerheads. Dicks has a long history of impressive growth and hopes to invest and utilize Foot Locker’s brand partners to realize sustainable long-term growth.
"We have long admired the cultural significance and brand equity that Foot Locker and its dedicated Stripers have built within the communities they serve. We believe there is meaningful opportunity for growth ahead. By applying our operational expertise to this iconic business, we see a clear path to further unlocking growth and enhancing Foot Locker's position in the industry. We will leverage the strengths of both organizations to serve the needs of global sports retail consumers." - Ed Stack (Executive Chairman of DICK'S)
Integration Outlook
Short-Term: Dick’s acquisition marks a major move for established sports apparel and shoe retailers. This gives Dicks access to Foot Locker’s established distributor networks and retail footprint. With the growing convergence of sports and culture, industry tailwinds show promise for this expanded network.
However, Dicks will need to invest significant time and capital to turn around the structurally challenge, mall-based retailer. Foot Locker relies heavily on Nike; roughly 60% of purchases, and is counting on them for a rebound after posting weak Q1 2025 store sales. Operating margins of ~3% are also quite low relative to Dick’s 11%. Investors worry that reviving Foot Locker would distract or hurt Dick’s core operations, which could otherwise benefit from reinvestment and expansion. Dick’s stock (NYSE: DKS) demonstrated this worry, falling from $209.54 to $177.14, roughly 15% in one day.
Despite the reaction, this move could prompt broader industry shifts toward scale and supply chain control. Competitors like Academy Sports, JD Sports, and department stores may feel pressure to respond via M&A or vertical integration to stay competitive.
Long-Term: Combining Dick’s omnichannel strengths with Foot Locker’s sneaker head relevance and international footprint creates a unique global platform serving both performance and lifestyle consumers. Historically U.S. focuses, Dick’s will gain international reach through Foot Locker’s real estate and logistics, especially in the fast-growing Middle Eastern markets via licensing arrangements. The deal is expected to generate $100 - $125 million in cost synergies through procurement and sourcing.
Dick’s will also benefit from Foot Locker’s brand partnerships with Nike, Adidas, On, and Hoka. Expanded shelf space and digital marketing can amplify these brands’ reach. Nike's exposure alone will grow from 24% to 38%, supporting its less promotional, margin-friendly strategy.
Long-term success will depend on maintaining high-margin core operations while transforming Foot Locker into a globally competitive brand, requiring disciplined capital allocation and strategic brand positioning.
Risks and Uncertainties: A key challenge will be integrating two distinct business models; Dick’s targets athletes and outdoor enthusiasts, while Foot Locker caters more towarda streetwear consumers. Poor integrations risk operational inefficiencies and brand dilution for Dick’s.
Supply chain risks loom, with footwear manufacturing concentrated in China, Vietnam, and Indonesia. Ongoing tariff hikes, some exceeding 100%, threaten already thin margins at Foot Locker. Dick’s may need to diversify suppliers to maintain cost efficiency.
Foot Locker’s $400 million in 4% debt due in 2029 adds financial pressures. Limited cash flow may force them to divert future earnings toward debt payments, potentially straining Dick’s operations if it must absorb liabilities or subsidize turnaround efforts.