By Nathalie Tadena
Industrial conglomerate 3M Co. (MMM) has abandoned its plan to
acquire Avery Dennison Corp.'s (AVY) office and consumer products
business after the Department of Justice threatened to file a civil
antitrust lawsuit to block the deal, the DOJ said.
The DOJ said the proposed deal would have substantially lessened
competition in the sale of labels and sticky notes, which would
have resulted in higher prices for consumers.
3M, whose products range from Post-it notes to furnace filters
and power lines, in January agreed to acquire Avery's office and
consumer products business for $550 million to increase its
presence in the sector. The unit's products include labels, binders
and filing and indexing products.
The proposed merger would have given 3M more than an 80% share
of both the U.S. labels and sticky-notes markets, the DOJ said.
The DOJ said its investigation found 3M and Avery dominated
adjacent spaces in the office-products business for many years. 3M
entered the labels market in the U.S. in 2009 and began competing
with Avery. Avery responded by lowering wholesale prices,
increasing promotions and customer rebates, accelerating
innovations in its labels and selling Avery-branded sticky notes,
the DOJ said.
Avery's shares tumbled 5.2% to $29.60 in regular session trading
on reports the Justice Department planned to sue to block the deal.
Avery shares were unchanged after hours while 3M shares were up by
39 cents to $92.07 after hours.
Write to Nathalie Tadena at nathalie.tadena@dowjones.com
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