Following a failed deal with 3M, Avery Dennison Corp. on Wednesday said that it signed a contract with a Canadian company to sell its office and consumer products unit.
The Pasadena label and office products maker said CCL Industries of Toronto will pay $500 million in cash for Avery’s office and consumer business. The sale also includes an Avery design and engineering unit. The businesses had combined revenue of about $910 million last year.
The selling price for both units is a discount to the $550 that 3M was willing pay for just the office and consumer products business last year. But that deal was terminated last fall after the U.S. Justice Department threatened to sue, citing concerns that the 3M’s purchase of the Brea-based unit – which makes pens, binders and other office materials – would give an unfair advantage to the St. Paul, Minn. maker of Post-It notes and Scotch Tape.
CCL makes labels, containers and plastic tubes and is a significantly smaller player in the market so is unlikely to prompt antitrust concerns. Avery has wanted to sell the two businesses so it can focus on its pressure-sensitive labels and coated films for various industrial uses. It plans to use an expected $400 million in net proceeds to repurchase shares and make an additional pension contribution.
“CCL is one of our largest customers, and we have a long-standing relationship with them,” Chief Executive Dean Scarborough said in a statement. “We are pleased that they will become the steward of the Avery brand for office products.”
Separately Avery reported fourth quarter net income of $49 million (48 cents a share), more than 120 percent (27 cents) higher than the same period a year earlier. Revenue rose 5 percent to $1.53 billion.
Eliminating restructuring costs and other one-time items, net income was 54 cents a share. Analysts surveyed by Thomson Reuters on average expected 49 cents a share adjusted profit on revenue of $1.47 billion.
Avery Dennison closed up $2.31, or more than 6 percent, to $38.45 on the New York Stock Exchange.