3M Terminates Planned $550M Avery Dennison Acquisition

3M Terminates Planned $550M Avery Dennison Acquisition

The announcement comes a month after the companies vowed to address regulators’ concerns that the deal would lead to unfair competition and said they were committed to making it happen.

3M Company has officially abandoned its planned $550 million takeover of Avery Dennison Corporation.

The two companies said late Wednesday that they have terminated the definitive agreement under which Maplewood-based 3M was poised to buy Pasadena, California-based Avery Dennison’s office and consumer products business.

“While we are disappointed with this turn of events, we remain focused, as always, on investing in product innovation and providing our customers with a broad range of premier products,” Jesse Singh, vice president and general manager of 3M’s stationery and office supplies division, said in a prepared statement.

The companies didn’t provide details surrounding the termination, but the announcement comes about a month after they vowed to address regulators’ concerns that the deal would lead to unfair competition and said they remained committed to the transaction.

Immediately prior to the companies’ early September announcement, the U.S. Department of Justice announced that 3M had dropped its takeover after the agency threatened to file a civil antitrust lawsuit to block the deal. Although the companies said that wasn’t the case, they acknowledged that they did withdraw their application for antitrust clearance in order to work on addressing the government’s concerns.

The Justice Department said last month that the proposed acquisition, which would have included Avery Dennison’s labels business, would have “substantially” reduced competition in the sale of labels and sticky notes, resulting in higher prices and reduced innovation for those products. While the deal wouldn’t have included all of Avery Dennison’s sticky notes assets, the agency said that the company would no longer “compete effectively in the sticky notes market.”

3M and Avery Dennison have dominated the office products business for many years and have been each other’s closest competitors in the sale of adhesive-backed labels and sticky notes, according to the Justice Department. The proposed merger, it said, would have raised 3M’s share of both the U.S. labels and sticky notes markets to more than 80 percent.

However, the companies said last month that they believed “the transaction would benefit customers and consumers.”

3M is Minnesota’s fifth-largest public company based on revenue, which totaled $29.6 billion in 2011. It employs 84,000 people worldwide. In January, the company—which offers an extensive line of office and consumer supplies and makes sticky notes under its Post-it brand—announced its intent to buy the Avery Dennison unit in an all-cash deal. It said at the time that it expected to close the deal in the second half of 2012.

Bloomberg reported Wednesday that Avery Dennison is putting its office and consumer products unit back on the selling block following the termination of the proposed deal with 3M. The company’s office and consumer products include labels, binders, presentation products, filing and indexing items, and highlighters. The unit’s 2011 sales were approximately $765 million, according to 3M. The unit is headquartered in Brea, California and employs 3,000 people worldwide.

In March, Twin Cities Business columnist Lee Schafer presented his case for why the proposed purchase made sense for 3M. To read that column, click here.