3M Still Pursuing $550M Avery Dennison Deal

3M Still Pursuing $550M Avery Dennison Deal

After the Department of Justice threatened to sue, 3M Company and Avery Dennison Corporation said that they will address antitrust concerns in order to receive regulatory clearance for 3M’s proposed acquisition of Avery Dennison’s office products unit.

Maplewood-based 3M Company said Tuesday that it has not abandoned its plans to acquire the office products unit of Pasadena, California-based Avery Dennison Corporation, and the two companies said that they will work to address regulators’ concerns that the deal would lead to unfair competition.
 
The announcement came just a few hours after the U.S. Department of Justice announced that 3M had dropped its $550 million takeover after the department threatened to file a civil antitrust lawsuit to block the deal.
 
But in their joint statement released late Tuesday, 3M and Avery Dennison said that they have not cancelled the agreement but did withdraw their application for antitrust clearance in order to work on addressing the government’s concerns.
 
3M, which makes sticky notes under its Post-it brand and various other office products, in January announced its intent to buy the Avery Dennison unit.
 
The proposed acquisition—which includes Avery Dennison’s label business—would “substantially” reduce competition in the sale of labels and sticky notes and result in higher prices and reduced innovation for those products, the Justice Department said. While the deal excludes some of Avery Dennison’s sticky notes assets, the department argued the company would no longer “compete effectively in the sticky notes market.”
 
The two companies have dominated the office products business for many years and have been each other’s closest competitors in the adhesive label and sticky notes business, according to the Justice Department. The proposed acquisition, it said, would raise 3M’s share of the market to more than 80 percent.
 
But the two companies said they “believe the transaction would benefit customers and consumers.”
 
“3M and Avery Dennison are committed to working together to explore options to address the [Justice Department’s] concerns, obtain regulatory approval, and complete a transaction between the parties,” the companies said.
 
3M might not be closing on the Avery Dennison deal anytime soon, but it recently closed on a different deal. In a separate announcement, the company said Tuesday that it has completed its acquisition of Federal Signal Technologies Group (FSTech), a division of Oak Brook, Illinois-based Federal Signal Corporation, for $110 million in cash. FSTech makes electronic toll collection and parking management systems; 3M in June announced its intent to acquire the unit.
 
3M is Minnesota’s fifth-largest public company based on revenue, which totaled $29.6 billion in 2011.