3M Co. said Tuesday that it is acquiring Avery Dennison Corp.'s office and
consumer products business for $550 million in cash.
Maplewood-based 3M will be buying the maker of brand-name pens and writing instruments, including Marks-A-Lot and HI-LITERS. Avery Dennison's office and consumer products division includes those brands in the United States, Canada, Germany, France, the United Kingdom and several other countries. Sales in 2011 were estimated at $765 million.
The deal, which is 3M's largest acquisition dating back more than a year, is aimed at broadening 3M's presence in office, education and consumer products.
"This acquisition complements our global business, which includes our iconic Post-it and Scotch brands, and will allow us to better serve our customers with accelerated product innovation," said Bill Smith, vice president and general manager of 3M's office supplies division.
Demand for office supplies has weakened in recent years as businesses and governments slash spending on administrative operations because of lower revenue. Moreover, profit margins on office products have come under pressure as retailers such as Staples and Office Depot expand product lines of their own-store brands.
As part of the deal, 3M will be allowed use the Avery brand name. 3M expects the acquisition, scheduled 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.
For Avery, the deal allows it to exit a business that has become increasingly less important as the company shifts its emphasis to making labeling products.
Avery Dennison's office and consumer products division is headquartered in Brea, Calif., and employs about 3,000 people globally.
3M shares climbed 2.2 percent to $83.49 and Avery Dennison gained 2.2 percent to $29.31. Both stocks reached their highest closing price since Aug. 3.
Reports from Bloomberg News and Dow Jones Newswires were used in this story.
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