In reaction, shares in Footasylum shot up 74% to 81.14p each while JD Sports gained 0.5% to 488.6p in morning trading.
Footsasylum shareholders will receive 82.5p in cash for each share they hold, representing a 77.5% premium to Friday’s closing price of 46.5p.
"We are pleased to make this offer for Footasylum, which is very complementary to our existing businesses in the UK, said JD Sports executive chairman, Peter Cowgill.
“We believe that there will be significant operational and strategic benefits through the combination of the very experienced and knowledgeable management team at Footasylum and our own expertise."
Footasylum targets 16 to 24-year-old consumers with its sports footwear and clothing, which JD Sports said is slightly older to its own demographic.
JD Sports will use existing cash resources and facilities to fund the acquisition.
Former JD Sports CEO is chairman of Footasylum
Footasylum's executive chairman, Barry Bowman, said: "The Footasylum board has concluded that the offer represents the best strategic option for Footasylum and its employees.
"It believes the offer fairly reflects Footasylum's current market position and prospects on a standalone basis and, as such, that Footasylum shareholders should be given the opportunity to realise value from the offer."
Bowman was chief executive of JD Sports for 14 years to 2014 before joining Footaslym.
JD Sports already owns 18.7% of Footasylum after buying a stake in February. At the time, it said it was prepared to increase its holding to 29.9% but ruled out a takeover bid.
"Whether JD’s denials were true at the time or a classic piece of misdirection, the rationale for the full takeover appears to be that Footasylum offers exposure to a slightly older demographic than the younger teenagers which typically shop in JD stores.
“On the face of it, the offer looks pretty generous, even if it is a long way short of Footasylum’s market value at IPO of £171mln.
Footasylum on the back foot since IPO
Footasylum shares have fallen more than 76% since it floated on the London Stock Exchange in 2017 following a series of profit warnings.
In January, Footasylum warned that profits will be lower than expected following heavy discounting.
Like the rest of the retail sector, Footasylum has come under pressure from tough online competition and subdued consumer spending.
JD Sports, on the other hand, has managed to buck the trend. The company said in a January trading update that it expected its full-year profits to be “at the upper end” of guidance following strong Christmas trading.
JD Sports has tapped into the lucrative athleisure trend, and its exclusive deals with brands such as Nike make its stores the go-to shop for those in search of new trainers or joggers.