PASADENA, Calif.--(BUSINESS WIRE)--Jan. 3, 2012--
Avery
Dennison Corporation (NYSE:AVY) today announced that it has signed a
definitive agreement to sell its Office and Consumer Products business
(“OCP”) to 3M Company (NYSE:MMM) for $550 million in cash. The
transaction is subject to customary closing conditions and regulatory
approvals.
“The sale of our Office and Consumer Products business to 3M presents
the best opportunity to maximize OCP’s value for Avery Dennison’s
shareholders, and complements 3M’s global portfolio,” said Dean A.
Scarborough, Avery Dennison chairman, president and chief executive
officer. “Our industry-leading Pressure-sensitive Materials and Retail
Branding and Information Solutions businesses, combined with our strong
balance sheet, make us well positioned for profitable growth and
increased return of cash to shareholders.”
Avery Dennison intends to use the proceeds from the transaction
primarily to reduce debt, make additional pension contributions, and
repurchase shares. This transaction will not negatively impact the
Company’s common stock dividend.
Avery Dennison’s Office and Consumer Products business is one of the
world’s leading suppliers of printable media and other products, with
expected sales in 2011 of approximately $765 million; and expected
adjusted operating income and Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA) in 2011 of approximately $80
million and $95 million, respectively. These adjusted operating income
and EBITDA estimates exclude allocations of general corporate overhead.
To reduce costs, and in anticipation of an OCP transaction, Avery
Dennison began implementing cost reduction actions as described in the
Company’s third quarter 2011 Form 10-Q.
Avery Dennison Corporation’s pro forma sales in 2011, excluding OCP, are
expected to be approximately $6 billion. All expectations herein of the
performance of OCP and Avery Dennison are as of October 26, 2011, the
date that the Company announced its third quarter 2011 results.
The transaction is expected to be completed in the second half of 2012.
J.P. Morgan Securities LLC advised Avery Dennison on the transaction.
Latham & Watkins served as Avery Dennison’s legal counsel.
Non-GAAP Financial Measures
Adjusted Operating Income for OCP refers to segment operating income
before interest, taxes, restructuring charges, general overhead
allocations and transaction costs.
EBITDA for OCP refers to Adjusted Operating Income before depreciation
and amortization.
Avery Dennison's pro forma sales refers to net sales excluding OCP
sales, adjusted for the positive impact on net sales from the change
from intercompany supply of pressure-sensitive materials to agreed-upon
supply of such materials to 3M.
These non-GAAP financial measures are not in accordance with, nor are
they a substitute for, the comparable GAAP financial measures. Non-GAAP
financial measures exclude the impact of certain events, activities or
strategic decisions. The accounting effects of these events,
activities or decisions, which are included in the GAAP financial
measures, may make it difficult to assess the transaction. By
excluding certain accounting effects, both positive and negative, from
certain of our GAAP financial measures, we believe that we are providing
meaningful supplemental information to facilitate an understanding of
the transaction. These non-GAAP financial measures are used
internally to evaluate trends in our underlying business, as well as to
facilitate comparison to the results of competitors for a single period.
While some of the items we exclude from GAAP financial measures may
recur, they tend to be disparate in amount, frequency, and timing.
About Avery Dennison
Avery Dennison (NYSE:AVY) helps make brands more inspiring and the world
more intelligent. For more than 75 years the company has been a global
leader in pressure-sensitive technology and materials, retail branding
and information solutions, and organization and identification products
for offices and consumers. A FORTUNE 500 company with sales of $6.5
billion in 2010, Avery Dennison is based in Pasadena, California and has
employees in over 60 countries. For more information, visit www.averydennison.com.
“Safe Harbor” Statement under the Private Securities Litigation
Reform Act of 1995:
Certain statements contained in this press release are “forward-looking
statements” intended to qualify for the safe harbor from liability
established by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements and financial or other business targets
are subject to certain risks and uncertainties. Actual results and
trends may differ materially from historical or anticipated results
depending on a variety of factors, including but not limited to risks
and uncertainties relating to the following: (1) the occurrence of any
event, change or other circumstance that could give rise to the
termination of the definitive agreement; (2) the outcome of any legal
proceedings that may be instituted against the Company and others
following the announcement of the definitive agreement; (3) the
inability to complete a transaction due to the failure to satisfy
conditions to the transaction; and (4) risks that the proposed
transaction disrupts current plans and operations and the potential
difficulties in employee retention as a result of announcing the
transaction.
For a discussion of the risk factors that could affect the Company’s
financial performance, see Part I, Item 1A. “Risk Factors” and Part II,
Item 7. “Management’s Discussion and Analysis of Results of Operations
and Financial Condition” in the Company’s most recent Form 10-K, filed
on February 28, 2011, and subsequent quarterly reports on Form 10-Q.
The forward-looking statements included in this press release are made
only as of the date of this press release, and the Company undertakes no
obligation to update the forward-looking statements to reflect
subsequent events or circumstances.
The financial information presented in this press release is preliminary
and unaudited.
Source: Avery Dennison Corporation
Avery Dennison Contacts:
Media
Relations:
David Frail, (626) 298-5902 (m) or (626) 304-2014
(o)
David.Frail@averydennison.com
or
Investor
Relations:
Eric M. Leeds, (626) 304-2029
investorcom@averydennison.com
