Avery Dennison sells 2 units to CCL Industries
NEW YORK (AP) — Office products maker Avery Dennison is selling two business units to CCL Industries for $500 million in cash.
The transaction includes Avery Dennison Corp.'s office and consumer products and its designed and engineered solutions businesses. The businesses had combined revenue of about $910 million in 2012.
Shares of Avery Dennison rose $2.66, or 7.4 percent, to $38.80 in midday trading Wednesday. The stock touched $40 earlier in the session, its highest level in more than a year.
Investors may be breathing a sigh of relief over the deal with CCL Industries, after a previous proposed transaction with 3M was scuttled.
In January 2012 Avery Dennison agreed to sell its office and consumer products business to 3M Co. for $550 million. That deal was called off in early October because of antitrust concerns. The deal would have given 3M a huge portion of the U.S. labels market to complement its Post-It sticky notes and other office supplies business. The Department of Justice threatened to sue to stop that sale.
Avery Dennison Chairman, President and CEO Dean A. Scarborough said in a statement on Wednesday that the deal with CCL Industries will allow the company to concentrate on its pressure-sensitive materials and retail branding and information solutions businesses.
CCL Industries Inc., which is based in Canada, makes labels, containers and plastic tubes.
CCL Industries President and CEO Geoffrey Martin said that the buyout is expected to add to its earnings per share starting in 2014.
Avery Dennison said that it plans to use its anticipated sale proceeds of about $400 million for stock buybacks and to make an additional pension contribution.
The deal is expected to close by the middle of the year.
Avery Dennison also reported its fourth-quarter results on Wednesday. The Pasadena, Calif., company's net income more than doubled to $49 million, or 48 cents per share, compared with $22.2 million, or 21 cents per share, a year ago. Stripping out restructuring costs and other items, earnings from continuing operations were 54 cents per share.
Revenue increased 5 percent to $1.53 billion from $1.45 billion.
Analysts, on average, expected earnings of 48 cents per share on revenue of $1.47 billion, according to data provider FactSet.
For the full year, Avery Dennison reported net income of $215.4 million, or $2.08 per share, up 13 percent from $190.1 million, or $1.78 per share, for all of 2011. Revenue edged up to $6.04 billion, from $6.03 billion.
Avery Dennison anticipates its fiscal 2013 adjusted earnings from continuing operations will be in a range of $2.40 to $2.80 per share.
Wall Street predicts earnings of $2.39 per share.