UPDATE 2-3M scraps deal for Avery-Dennison's office products

Wed Oct 3, 2012 7:51pm EDT

* U.S. had raised antitrust concerns

* Avery-Dennison still interested in selling unit

Oct 3 (Reuters) - Diversified U.S. manufacturer 3M Co on Wednesday dropped its effort to buy Avery-Dennison Corp's office and consumer products business, about a month after U.S. regulators raised anti-trust concerns over the proposed deal.

3M had originally planned to fight the Justice Department's objections to the $550 million takeover, with Chief Financial Officer David Meline telling investors on Sept. 19 that the company was still looking for a way to get the deal done.

"We are disappointed with this turn of events," said Jesse Sigh, a 3M vice president who oversees its office supplies arm, in a statement on Wednesday.

Separately, Avery said it will continue to pursue a sale of the business.

The U.S. on Sept. 4 had threatened a lawsuit to block the deal. The Justice Department said the proposed acquisition "would have substantially lessened competition in the sale of labels and sticky notes."

Consumers would have seen higher prices and reduced innovation as a result, the department said.

The proposed deal, announced in January, was to bring together two well-known consumer product families including 3M's Post-It notes and Avery's HI-LITERS markers.

In the meantime, St. Paul, Minnesota-based 3M has pushed ahead with other takeovers, this week reaching an $860 million deal to buy industrial ceramics company Ceradyne Inc, its biggest deal since Inge Thulin became chief executive officer of 3M in February.

Thulin has said 3M will do fewer, but larger deals, on his watch than it did under predecessor George Buckley.

Avery shares were down 7.8 percent after the bell. They closed at $31.45 on the New York Stock Exchange on Wednesday.

3M shares closed up 24 cents at $93.78 on the same exchange.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.