Athletic retail giants to merge in $2.4 billion deal this month

Two major retailers best known for their athletic wear have announced plans to merge in a $2.4 billion deal which is expected to close this month.

In a statement on Aug. 26, Dick’s Sporting Goods said that plans to merge with Foot Locker are still underway after approximately 99% of both companies’ shareholders approved the merger and have received all the necessary regulatory approvals.

This includes fulfilling the waiting period under the Hart-Scott-Rodino Act, which gives the Federal Trade Commission (FTC) and the Department of Justice (DOJ) 30 days to review large mergers before they’re completed. This expired on Aug. 25 and the merger is expected to close on Sept. 8.

“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,” CEO of Foot Locker Mary Dillon said in an Aug. 22 statement.

Following the companies’ announcement of their agreement, U.S. Sen. Elizabeth Warren, D-Mass., wrote in a letter to the FTC and DOJ, requesting that the government officials block the merger, citing that it could cut jobs, raise prices and reduce competition, CNBC reported.

“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 wrote, according to the media outlet, citing a July survey from Credit Karma. “Higher prices on athletic footwear could lead to further economic hardship for parents.”

Amanda Lewis, who spent nearly a decade scrutinizing mergers at the FTC and now is a partner at the law firm Cuneo Gilbert and LaDuca, told CNBC that the merger between Dick’s Sporting Goods and Foot Locker is unlikely to raise many concerns because the merger would represent 15% of the sporting goods market.

“Usually below 30% doesn’t raise too many agency red flags,” Lewis explained to CNBC.

Lewis added that “she expects the merger to be approved and at most, Dick’s could be required to divest some of its stores to competitors to preserve competition in local markets.”

The merger would combine all of Foot Locker’s 2,725 stores and Dick’s Sporting Goods roughly 850 locations, creating a business with a combined revenue of $21 billion, according to RetailDive. Although Foot Locker would continue to operate as a standalone business, the two companies will have the opportunity to share resources and have access to their respective customer bases.