Dick’s Sporting Goods (NYSE:DKS) announced on Thursday that it will acquire Foot Locker (NYSE:FL) in a $2.4 billion all-cash deal, a move aimed at bolstering its position in the athletic footwear market during a period of soft consumer demand and growing trade tensions.

The $24-per-share offer represents an 86% premium over Foot Locker’s last closing price, marking the second high-profile footwear merger this month following Skechers’ $9.42 billion acquisition by private equity firm 3G. The acquisition significantly expands Dick’s store footprint to over 3,200 locations and offers the company international reach through Foot Locker’s operations across 20 countries.

Retail analysts view the merger as both a defensive and strategic play, giving the combined entity greater leverage in negotiations with major suppliers like Nike (NYSE:NKE), Adidas (USOTC:ADDYY), and Puma (USOTC:PMMAF). Ongoing concerns over rising tariffs under the Trump administration have added pressure to streamline operations and optimize sourcing costs.

“This appears to be a scale-driven decision partly motivated by tariff risks, but also a timely opportunity to gain more influence in the sneaker ecosystem,” said Joel Brock, a partner at consulting firm West Monroe.

Following the announcement, Foot Locker shares skyrocketed 85% to $23.81, nearly erasing year-to-date losses. Conversely, Dick’s stock declined 14%, with some analysts questioning the strategic value of the acquisition. John Kernan of TD Cowen called the deal a “strategic mistake,” suggesting that Dick’s will need to ramp up spending to turn around Foot Locker’s struggling business.

Foot Locker has faced stiff competition in recent years, particularly as Nike prioritized direct-to-consumer (DTC) channels, reducing wholesale partnerships. This shift, combined with declining mall traffic – where many of Foot Locker’s stores are located – has pressured sales. However, Nike has reportedly reversed its DTC-heavy approach under new CEO Elliott Hill, rekindling relationships with retail partners.

Dick’s plans to maintain Foot Locker as an independent brand within its portfolio. Despite recent challenges, Foot Locker reported global sales of $8 billion in 2024.

The acquisition is expected to close in the latter half of 2025 and will be funded through a mix of existing cash reserves and new debt issuance.