TWO beloved athletic retailers are set to finish their merger in just days, meaning more options for customers.
The deal was first announced in May, and is expected to close sometime soon in September.
Dick’s Sporting Goods is acquiring Foot Locker (stock image)[/caption]
Foot Locker will remain a stand-alone operation (stock image)[/caption]
An estimated 99% of shareholders for both Dick’s Sporting Goods and Foot Locker approved of the plans to come together, according to an August 26 statement.
Dick’s is acquiring Foot Locker for a whopping $2.4 billion, with plans in place to still keep the sneaker retailer as a stand-alone business within its portfolio.
That means Foot Locker will still stay and operate as a separate entity, along with Foot Locker Kids, Champs, WSS and others.
With Foot Locker having around 2,725 locations and Dick’s at about 850, that’s quite the footprint, and it would mean a business with total revenue estimates of around $21 billion, per Retail Dive.
Lauren Hobart, Dick’s Sporting Goods CEO, emphasized during an earnings call this spring that it should be so seamless that consumers “may or may not know that Dick’s and Foot Locker are one” after the acquisition is finalized.
“The combination of them for the consumer is not the most important thing, it’s making sure that there are two powerful brands that are meeting all consumer needs, wherever, whenever, however they want to shop,” Hobart added.
As of the end of August, all regulatory approvals have been met.
A crucial part of the approvals includes the waiting period established by the Hart-Scott-Rodino Act, which allows the Federal Trade Commission (FTC) and the Department of Justice (DOJ) time to review the merger for 30 days and raise any concerns.
The review window expired on August 25, and the current expected date for the deal to close is September 8.
Mary Dillon, CEO of Foot Locker, praised the merger with Dick’s Sporting Goods as a positive decision for the sneaker industry.
“We are now one step closer to joining forces with Dick’s and even better positioning the business to expand sneaker culture, elevate the omnichannel experience for our customers and brand partners, and enhance our position in the industry,” Dillon said in a statement.
It is true that shoppers could see a wider selection of top sneaker offerings with the merger.
Brands like Nike, for example, have Dick’s and Foot Locker as top wholesale partners.
SENATOR’S STIPULATION
Still, it could mean fewer sales, job cuts, increased prices, and reduced competition, according to a letter submitted to the FTC and DOJ by Massachusetts Senator Elizabeth Warren (D) earlier this year, per CNBC.
We are now one step closer to joining forces with Dick’s and even better positioning the business to expand sneaker culture, elevate the omnichannel experience for our customers and brand partners, and enhance our position in the industry.
Mary Dillon
“This is particularly concerning given that more than half of parents ‘plan to sacrifice necessities, such as groceries,’ because of rising prices for back-to-school shopping,” Warren argued in the letter, citing a survey in July conducted by Credit Karma.
“Higher prices on athletic footwear could lead to further economic hardship for parents.”
Other experts felt differently about the merger.
NOT TO WORRY
Amanda Lewis, who previously worked for the FTC and is now a partner at law firm Cuneo Gilbert and LaDuca, told the publication that it was not likely to raise concerns as Dick’s and Foot Locker represent about a combined 15% of the sporting goods industry.
“Usually below 30% doesn’t raise too many agency flags,” Lewis explained.
She also added that, at most, “Dick’s could be required to divest some of its stores to competitors to preserve competition in local markets.”
The merger also greatly helps Foot Locker, who had been struggling a bit in recent years with plans for 400 closures in 2023 alone.
It also opened 280 new locations, however, but Hobart has previously confirmed that shutterings of underperforming locations will likely continue through the finalizing of the deal.
There have been other noteworthy acquisitions as of recent.
Capital One officially acquired Discover in May for $35.3 billion.
Cable and home internet provider Spectrum is also merging with a top competitor in a deal worth $34.5 billion.
