--3M and Avery Dennison have scuttled a deal for 3M to buy
Dennison's office and consumer products business
--The move follows antitrust regulators' complaints
--3M said earlier Wednesday it is reorganizing its operating
structure
(Updates with companies' disclosure that 3M and Dennison are
backing out of a deal.)
By Kristin Jones and Tess Stynes
Manufacturer 3M Co. (MMM) and Avery Dennison Corp. (AVY) have
scuttled a deal under which 3M would have bought Dennison's office
and consumer products business.
The moves comes after government antitrust regulators had raised
objections to the deal, leading to confusion about the deal's
status.
The Justice Department said in September that the two companies
were abandoning the deal, while 3M and Avery said at the time the
$550 million transaction was still on the table. The companies said
last month only that they had withdrawn the deal from the
government antitrust-review process.
"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,"
said Jesse Singh, an executive at 3M.
The government had complained that the deal would have harmed
competition in the market for labels and sticky notes. Had the
transaction proceeded, 3M would have held a more than 80% share of
the U.S. markets for those office products, the department
said.
It wasn't the only deal 3M has in the pipeline; the manufacturer
agreed earlier this week to acquire advanced ceramic maker Ceradyne
Inc. (CRDN) for around $860 million.
Avery Dennison said Wednesday that it would continue to pursue a
sale of the business. Its shares sank 4.3% after hours to $30.10.
The stock is up 9.7% for the year.
3M said earlier Wednesday that it plans to reduce the number of
its major business groups to five from six starting next year, the
latest big manufacturer to realign its organizational structure in
an effort to improve its competitiveness.
Other major firms that have unveiled plans to reorganize their
operating structures in recent months include diverse companies
such as Coca-Cola Co. (KO) and Dow Chemical Co. (DOW) as they aim
to meet the changing demands of the marketplace.
Inge Thulin, 3M chairman and chief executive, said, "The change
is a natural outcome of our strategy to increase relevance to our
customers and to broaden our presence in the markets we serve."
The company's vast array of products includes Scotch tape,
Nexcare bandages and Post-it notes.
The revamped structure, which takes effect Jan. 1, will include
two new segments: an electronics and energy segment and a safety
and graphics business.
The industrial business will remain the same, with the exception
of the renewable energy operations moving to the electronics and
energy unit.
The health care and consumer segments remain intact.
The company in July reported that second-quarter earnings edged
up 0.6% on improved margins, though challenging economic conditions
and the strengthening U.S. dollar hurt the consumer- and
industrial-products maker's sales.
3M shares were down fractionally to $93.46 in after-hours
trading. The stock is up 15% so far this year.
Write to Kristin Jones at kristin.jones@dowjones.com or Tess
Stynes at Tess.Stynes@dowjones.com
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