Dick’s Sporting Goods announced plans to acquire rival Foot Locker in a $2.4 billion deal that will boost its presence in the Nike sneaker market and open the door to international expansion. The deal offers Foot Locker shareholders either $24 per share in cash or stock in Dick’s, representing a 66% premium over the average share price in recent weeks.

Foot Locker has been working through a business turnaround under CEO Mary Dillon. While the company has shown some progress, slower consumer spending and broader market challenges have pressured its stock, leading to speculation it could be acquired. Dillon said the deal reflects the work her team has done and sees the combination as a way to strengthen the brand’s role in the sneaker industry and improve the customer experience.

Dick’s, which brings in nearly twice the revenue of Foot Locker, plans to keep its new acquisition operating as a separate business unit. It will maintain Foot Locker’s existing retail brands, including Champs Sports, Kids Foot Locker, WSS, and atmos. CEO Lauren Hobart said the two companies will remain distinct in the eyes of consumers, adding that the focus will be on meeting customer needs rather than blending brands.

Nike stands to be a key part of the combined strategy. Both Dick’s and Foot Locker are major Nike partners, and their union would give them more leverage as Nike continues to rely heavily on wholesalers. Nike CEO Elliott Hill voiced support for the deal, noting that both retailers have long-standing relationships with athletes and sneaker buyers.

The acquisition also introduces Dick’s to a younger, urban customer base that has long driven sneaker trends. While Dick’s traditionally serves older, suburban shoppers, Foot Locker has built strong loyalty among a different demographic that will help fuel future growth. The merger also gives Dick’s access to 2,400 international stores across 20 countries, significantly increasing its global footprint.

Although Dick’s executives say they’re not immediately focused on overseas expansion, the merger expands the company’s potential market from $140 billion to $300 billion. Dick’s believes the deal will boost earnings in the first full year and generate up to $125 million in cost savings.

Not everyone is convinced. TD Cowen downgraded Dick’s stock after the announcement, warning that the deal could come with risks tied to Foot Locker’s store base, which includes many mall locations. Analysts also questioned whether the two companies can effectively combine operations without losing value.

Dick’s said it does not expect major store closures, though some underperforming locations may shut down. The company is confident the merger will pass regulatory review, with current leadership expecting no issues from the Federal Trade Commission.

Foot Locker shares jumped over 80% after the announcement. Dick’s shares fell roughly 15%, reflecting investor concerns over costs and potential challenges in bringing the two companies together. Executive Chairman Ed Stack said he understands the initial doubts but believes the opportunity is too strong to pass up.