DOW JONES NEWSWIRES
3M Co. (MMM) agreed to acquire Avery Dennison Corp.'s (AVY)
office and consumer products business for $550 million, increasing
the diversified manufacturer's presence in the sector.
The deal "complements our global business, which includes our
iconic Post-it and Scotch brands," said Bill Smith, general manager
of 3M office supplies division.
The Avery Dennison unit, whose products include labels, binders
and filing and indexing products, last year had estimated sales of
$765 million. Office suppliers have continued to struggle as
consumers and businesses rein in spending and governments cut
budgets.
3M expects the acquisition, expected to close in the second half
of the year, to reduce earnings by about 6 cents a share in the
first year after the closing. However, excluding
integration-related expenses and other items, the deal is expected
to add 3 cents a share during the period.
Avery Dennison in October reported that third-quarter profit
sank 22% amid lower demand in its retail branding segment, though
revenue rose in its pressure sensitive materials business.
3M, whose products range from Post-It notes to furnace filters
and power lines, has posted stronger sales for more than two years,
fueled by new products and growth in emerging markets. However, in
October, 3M reported its third-quarter earnings fell 1.6% as its
organic volume growth slowed.
3M shares were up 53 cents at $82.26 in recent premarket
trading. Avery Dennison shares closed Friday at $28.68 and were
inactive in premarket trading. Markets were closed Monday for the
New Year's Day holiday. The stocks are down 5.8% and 31%,
respectively in the past year.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com