JD Sports Fashion PLC (LSE:JD.) shares rose 3.3% on Thursday as investors warmed to the idea that a potential tie-up between Dick’s Sporting Goods and Foot Locker might end up helping, not hindering, its US operation.
Speculation about a $2.3 billion takeover resurfaced after The Wall Street Journal reported that Dick’s is weighing a $24-a-share offer for Foot Locker, an 86% premium to the current price.
But Peel Hunt argues this may not spell trouble for JD. In fact, the broker sees a real chance for JD Sports to take share while its rival is busy fixing a sprawling store estate.
Dick’s has no experience running international fashion-led stores, and Foot Locker has struggled strategically for years.
JD, by contrast, has built a well-oiled model in both the UK and US markets.
As Peel Hunt puts it, “there is massive execution risk” in stitching together 800 large-format Dick’s outlets with 2,400 Foot Locker stores across a global footprint.
In the meantime, JD’s valuation remains undemanding, and any market jitters on the back of the takeover chatter could be a buying opportunity.
The broker left its 200p price target and 'buy' rating unchanged.
While no formal deal has been announced, the view is clear: if consolidation is coming to US sports retail, JD might just be the one left standing taller.
The shares rose 2.97p to 92.99p.