Avery Dennison Corporation ( AVY )
has clarified that the agreement to sell its Office and Consumer
Products to 3M Co. ( MMM ) is
still on. The statement was in response to a news release from the
U.S. Department of Justice (DOJ) declaring the abandonment of the
The DOJ had earlier informed the companies that it would file a
civil antitrust lawsuit to block the deal. According to the DOJ,
the proposed merger will give 3M Co. more than an 80% share of both
the U.S. labels and sticky notes markets and result in reduced
competition in the sale of labels and sticky notes. This would in
turn lead to higher prices and reduced innovation for products that
millions of American consumers use every day.
In light of concerns about the transaction raised by the DOJ,
the companies have voluntarily withdrawn the notification and
report forms filed regarding the transaction under the
Hart-Scott-Rodino Act. The companies stated that together they will
look for options to address the DOJ's concerns, obtain regulatory
approval, and complete the transaction.
Avery Dennison's Office and Consumer Products unit manufactures
and sells a wide range of office and printable media products under
the Avery Dennison brand name. The company had long held a strong
position in the labels business. 3M Co. sold sticky notes under its
In 2009, 3M entered the labels market, intensifying the
competition for Avery Dennison. In retaliation, Avery
Dennison lowered wholesale prices, increased promotions and
customer rebates and accelerated innovations in labels. Avery
Dennison also started selling its own brand of sticky notes.
However, the segment's results were affected due to weak
end-market demand and increased competition. Increased investment
in demand creation, consumer promotions, and innovation, as well as
lower volume pressurized margins. Consequently, in December 2011,
Avery agreed to sell its Office and Consumer Products Group, for
approximately $550 million to 3M Co.
St. Paul, Minnesota-based 3M Company, together with its
subsidiaries, operates as a diversified technology company with
manufacturing operations spread over 60 countries worldwide. It has
more than 35 business units organized into six segments: Consumer
and Office, Display and Graphics, Electro and Communications,
Healthcare, Industrial and Transportation, and Safety, Security and
Protection Services Business.
Pasadena, California-based Avery Dennison produces
pressure-sensitive materials, office products and a variety of
tickets, tags, labels and other converted products. Avery is a
Fortune 500 company operating over 200 manufacturing and
distribution facilities with roughly 32,000 employees in more than
60 countries. It also competes with Bemis Company
Inc. ( BMS ).
The shares of Avery Dennison are currently maintaining a Zacks
#3 Rank (Hold) over the short term.
AVERY DENNISON (AVY): Free Stock Analysis
BEMIS (BMS): Free Stock Analysis Report
3M CO (MMM): Free Stock Analysis Report
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