Scott Eells/Bloomberg News3M is the maker of Post-it notes and Scotch Tape.
3M‘s acquisition of an Avery Dennison unit was in limbo on Wednesday, as the companies scrambled to clear regulatory obstacles.
The Justice Department balked at the $550 million deal, threatening to file a civil antitrust lawsuit against the companies, which sell labels and sticky notes. On Tuesday, the department announced that 3M had “abandoned” its takeover plans in the face of a court battle.
But just hours later, the companies vowed to keep fighting. In a statement late on Tuesday, 3M and Avery Dennison clarified that they “voluntarily” withdrew the paperwork for the deal as they sought to appease the Justice Department’s concerns.
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Documents: The companies’ news releaseThe companies said they were “committed to working together to explore options” for completing a deal with regulatory approval. “The companies continue to believe the transaction would benefit customers and consumers,” the statement said.
The all-cash deal was announced in January. 3M, the maker of Post-it notes and Scotch Tape, agreed to buy the office and consumer products business of the Avery Dennison Corporation, which makes folder dividers, labels and a popular brand of highlighters. While the deal excluded some of Avery Dennison’s sticky notes business, the Justice Department argued the company would no longer “compete effectively in the sticky notes market.”
Jason Szenes/European Pressphoto AgencyAvery Dennison officials at the New York Stock Exchange in 2010.
“The proposed acquisition would have substantially lessened competition in the sale of labels and sticky notes, resulting in higher prices and reduced innovation for products that millions of American consumers use every day,” the Justice Department said on Tuesday.
Regulators said the two companies were each other’s closest competitors in the adhesive label and sticky notes business. And under the terms of the deal, according to the Justice Department, 3M’s share of the market would have jumped to more than 80 percent.
The deal was part of a broader acquisition spree for 3M, a manufacturing conglomerate. Last year. the company bought Advanced Chemistry and Technology, a maker of aerospace sealants; assets from Zargis Medical, a medical software maker; and Hybrivet Systems, which makes lead detection products.
Article source: http://dealbook.nytimes.com/2012/09/05/3m-and-avery-dennison-committed-to-deal-despite-antitrust-issue/?partner=rss&emc=rss
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