Avery Dennison Corporation (NYSE: AVY) announced in late March that it will acquire Paxar Corporation (NYSE: PXR), of White Plains, NY, USA, in a cash transaction valued at approximately $1.34 billion. Avery says that the acquisition is expected to enhance its ability to compete and grow in the fragmented, expanding $15 billion-plus global retail information and brand identification market.
“This combination is a terrific strategic fit,” says Dean A. Scarborough, president and CEO of Avery Dennison. “Paxar’s highly complementary capabilities advance our strategy to deliver exceptional products and superior service to customers at every level of the global retail supply chain, and to increase efficiency and reduce costs in a rapidly changing and increasingly competitive global marketplace.”
Paxar offers tags and labels, primarily in the fabric sector; labeling systems, label design and distribution software, printers and supplies worldwide, and has long been a competitor of Avery Dennison in certain markets.
Avery Dennison’s Retail Information Services (RIS) business represents one of its fastest-growing units,” says Scarborough. “RIS provides brand identification and supply chain management solutions primarily for manufacturers and retailers, including tag and label design and printing; inventory and shipment tracking; and data management systems.
“This combination will give us the capabilities, products and geographic reach to pursue new segments of the global retail information and brand identification market. These segments include retailers and manufacturers in India and China.”
“Combining with Avery Dennison provides substantial benefits to our customers while delivering compelling value to Paxar shareholders,” adds Rob van der Merwe, chairman, president and CEO of Paxar. “In particular, the broader capabilities of the combined Company will better meet customer demands for improved quality, product innovation and speed of delivery. Although we understand that some jobs will be affected through the integration of our businesses, employees of the combined Company will have expanded opportunities as part of a larger organization.”
“Lower-cost production — and higher levels of quality and speed of delivery — will be crucial for winning against the local and regional competition we face at the buying office and factory levels,” says Scarborough. “This combination will benefit the factories that purchase our tickets and tags as well as the retailers and the brand owners they supply.”
Under the terms of the agreement, Avery Dennison will purchase each common share of Paxar for $30.50. Avery Dennison expects approximately $90 to $100 million in annual cost savings.