Dick's sporting goods are buying footstep lockers for $2.4 billion in the footwear company's second deal for the big U.S. footwear makers in recent weeks as the industry struggles to deal with the impact of steep new U.S. tariffs on its production.
Dick said Thursday it is expected to run foot lockers as a standalone unit and retain the foot locker brand, which includes children's football lockers, Champs Sports, WSS and Japanese sneaker brand Atmos.
"Sports and sports culture remain incredibly powerful, and with this acquisition we will create a new global platform that enhances store design and omnichannel experience through the iconic concept of consumer knowing and loving, serving those evolving needs, and a portfolio that appeals to our diverse customer bases," Dick's CEO Lauren Hobart said in a statement.
Skechers announced that the investment company will be privately owned by 3G Capital's investment company and is worth more than $9 billion.
Foot Locker shareholders have the option to get $24 in cash or 0.1168 shares of Dick common stock.
The footwear industry is increasingly concerned about Mr. Trump’s trade war with other countries, especially China. Sneaker manufacturers have made significant investments in production in Asia.
Stocks of sports goods and sports shoes companies are under pressure throughout the year. Foot Locker's stock price has fallen by more than 40% this year. The company's stock soared by $10.78, or nearly 84%, until trading began Thursday.
According to the American Association of Clothing and Footwear, about 97% of clothes and shoes purchased in the United States are mainly imported from Asia. Using factories overseas can reduce labor costs for U.S. companies, but it is impossible for them and overseas suppliers to absorb price increases due to new tariffs.
Foot Locker offers Dick's huge potential, its huge real estate footprint and will make Pittsburgh's first foothold overseas.
"Increasing 4.3% of the sporting goods market will result in an immediate boost," Neil Saunders, an analyst at retail industry, said in an email. "This will also give Dick a greater bargaining power with national brands, especially in the sports shoes space. As the chain operates in similar sections, the scope of synergistic savings may also exist."
Foot Locker has approximately 2,400 retail stores in 20 countries in North America, Europe, Asia, Australia and New Zealand. It also has licensed stores in Europe, the Middle East and Asia. The company had global sales of $8 billion last year.
"While there is some overlap between these locations, the nature of the store is different, and lockers will give Dick access to more malls and customer choices," Sanders said.
Dick's said it expects to close football locker transactions in the second half of the year. The transaction still requires approval from Foot Locker shareholders.
Dick's stock fell more than 13% before the market opened, while stocks in foot lockers soared more than 82%.