UPDATE 1-Avery Dennison to sell two businesses, shares rise

Wed Jan 30, 2013 9:33am EST

Related Topics

* Avery Dennison to sell office products, engineered solutions units for $500 mln

* CCL says deal to take pro-forma annual rev above $2 bln for first time

* Avery shares rise 10 percent; CCL up 9 percent

Jan 30 (Reuters) - Avery Dennison Corp said it would sell its consumer and office supplies unit, which includes Avery labels and HI-LITERS markers, and its coated films business to Canada's CCL Industries Inc for $500 million.

Avery shares rose more than 10 percent to $39.76 in early trading on the New York Stock Exchange on Wednesday. CCL shares were up 9 percent at C$49.99 on the Toronto Stock Exchange.

The sale comes three months after 3M Co dropped its $550 million offer to buy Avery's office and consumer products business following anti-trust concerns.

Avery said the sale of the businesses would help it focus on its pressure-sensitive materials business, which makes label and packaging materials.

The company expects to use proceeds from the sale to repurchase shares and make an additional pension contribution.

Toronto-based CCL Industries, one of Avery Dennison's largest customers, said the two businesses had combined revenue of about $910 million in calendar year 2012 and would help expand its presence in the U.S. market.

"We are significantly expanding our CCL Label market sectors with our entry into the North American durable goods market," CCL Chief Executive Geoffrey Martin said in a statement.

Martin said the acquisition was the largest in the company's history and would take its pro-forma annual revenue above $2 billion for the first time.

The Canadian company expects the deal to add to its earnings per share in 2014 and beyond.

J.P. Morgan Securities LLC advised Avery Dennison on the deal, which is expected to be completed in mid-2013. Latham and Watkins was its legal counsel.

Avery also reported fourth-quarter results on Wednesday. Profit more than doubled to $49 million and the company said it expects 15-35 percent growth in adjusted earnings per share this year.

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