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Avery Dennison set

July 18, 2005

Although rumors abounded, Avery Dennison’s proposed
acquisition of Jackstädt — its former Germanbased
rival — still signals the most surprising event
to have hit the pressure sensitive materials industry in
recent years. Relatively speaking, the size and potential
impact of the deal on the global labeling industry mirrors
some of the large-scale consolidations taking place within
the European and North American papermaking industry.
In this case we have an existing global leader with sales
in 2000 of $3.9 billion swallowing a formidable competitor
with consolidated revenues of some $400 million for the
same year.
Headquartered in Wuppertal, Jackstädt is the world’s
largest privately-owned manufacturer of pressure sensitive
label materials. It was founded in 1920 as a fine-paper
wholesale business supplying the German printing industry.
It began producing label materials in 1949, which
places it in the same pioneering league as Avery itself.
Today it operates 10 manufacturing facilities around the
world and has subsidiaries in 20 countries. Recently its
JAC Asia-Pacific operation formed a joint venture in Thailand,
JAC-Thai KK.
Exports of JAC products account for 80 percent of sales.
About half of its 2,140 employees are based in Germany.
Avery Dennison of Pasadena, CA, will pay an undisclosed
sum of cash. This is expected “to be accretive” to its
earnings by the second year after the transaction closes. It
describes the deal as a “definitive agreement.” It is subject
to several closing conditions, including regulatory
approvals at national levels. The fourth quarter of 2001
should see a closure. Both companies are expected to operate
independently until this time against a background of
speculation as to how the merged organization will finally
reshape itself.
Besides the usual references to enhanced shareholder
value and benefits for customers and staff, Philip M. Neal,
chairman and CEO, did say, however, that Jackstädt would
complement its activities in such key areas as Asia, Latin
America and Europe: “It will especially enhance our ability
to grow in Eastern Europe.” Both companies expect to
achieve cost savings through more efficiencies in purchasing
and manufacturing, as well as gain improved cash flow
from managing the working capital more efficiently.
Incidentally, the news broke soon after Avery Dennison
Fasson Roll Europe had opened a test and application laboratory
dedicated to variable information printing applications
using desktop printers. Located in the Leiden
headquarters in The Netherlands, the new laboratory covers
all VIP techniques. Converters can gain access to combinations
of printers, media, transfer ribbons and printing
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