3M Still Pursuing Avery Dennison Purchase Despite Department of Justice Antitrust Lawsuit Threat

St. Paul, Minnesota-based 3M, parent company to supplier 3M Promotional Markets, has stated that the company is still working with Avery Dennison Corp. on a purchase agreement, despite a report from the U.S. Department of Justice (DOJ) claiming that the deal has been terminated.

In January, 3M announced that it had reached a definitive agreement with Avery Dennison to acquire the Pasadena, California-based corporation's office and consumer products (OCP) business for approximately $550 million. The DOJ analyzed the purchase agreement, and found that 3M and Avery Dennison already dominated the sticky notes and labels markets in the U.S., respectively. According to the department's research, 3M would control more than 80 percent of those markets after the purchase. As a result, the DOJ indicated it would file an antitrust lawsuit to prevent the deal.

Following the antitrust suit threat, the DOJ issued a release in early September stating that 3M had abandoned its acquisition plans. "We welcome the companies' decision to abandon this deal, which raised competitive concerns in the sale of labels and sticky notes," said Joseph Wayland, acting assistant attorney general in charge of the Department of Justice's Antitrust Division. "As a result of the abandonment of this transaction, American customers will continue to receive the benefits of competition including lower prices and greater innovation in these basic office supplies."

3M and Avery Dennison quickly responded, stating that the department's release was incorrect and that both companies fully intend to complete the deal. "In light of concerns about the transaction raised by the DOJ, the companies have voluntarily withdrawn the notification and report forms filed under the Hart-Scott-Rodino Act," they said in a joint statement, adding that they are working together to "address the DOJ's concerns, obtain regulatory approval, and complete a transaction between the parties."