A month after the Justice Department had threatened to sue block the deal, 3M announced on Wednesday that it was terminating its agreement with Avery Dennison to buy its office and consumer products business for $550 million in cash.
Avery Dennison said in its statement that it would continue to seek a sale of the business, which had sales of $6 billion from continuing operations last year.
“While we are disappointed with this turn of events, we remain focused, as always, on investing in product innovation and providing our customers with a broad range of premier products,†Jesse Singh, vice president and general manager of the 3M stationery and office supplies division, said in a statement.
The deal was announced in January, and followed a flurry of acquisitions by 3M, including the purchase of Advanced Chemistry and Technology, a maker of aerospace sealants ; and Hybrivet Systems, which makes lead detection products.
But in September, the Ju stice Department announced that the two companies had abandoned the merger in the face of the department's competition concerns only to have the companies insist several hours later that they would work to try to address the regulator's concerns in order to salvage the deal.
As recently as Sept. 19, at an industry conference, 3M's chief financial officer, David Meline, held out some hope, saying that there was “a contract that remains in place at the present time and we are reviewing the situation.â€
A combination of the Avery unit and 3M would have put together the closest competitors in the the market for adhesive labels and sticky notes. Last month, the Justice Department said, “The proposed acquisition would have substantially lessened competition in the sale of labels and sticky notes, resulting in higher prices and reduced innovation for products that millions of American consumers use every day.â€
