In a bid to extend its footprint in the office, education and consumer categories, the $23-billion 3M yesterday said that it had entered into a definitive agreement to acquire the office and consumer products business of Avery Dennison Corp.

3M will pay a total purchase price of $550 million in cash, subject to post-closing adjustments.

Avery Dennison's office and consumer products business is one of the world's leading suppliers of office and education products including labels, binders, presentation products, filing and indexing products, writing instruments, and other office and home organisation products.

The business also includes the Avery, Hi-Liters and Marks-A-Lot product brands in the US, Canada, Germany, France, United Kingdom, Australia, New Zealand, and several other countries, 3M said in a statement.

"Adding the business will increase 3M's scale and broaden its global presence in office, education and consumer products," it said.  

Avery Dennison expects its office and consumer products business to generate 2011 sales of approximately $765 million; and expected adjusted operating income and earnings before interest, taxes, depreciation and amortisation (EBITDA) in 2011 of approximately $80 million and $95 million, respectively.

It intends to use the proceeds from the transaction primarily to reduce debt, make additional pension contributions, and repurchase shares.

"This transaction will not negatively impact the company's common stock dividend," Avery Dennison said.

After the merger, 3M said, the merged business would continue to invest in product innovation, category management and business and supply chain analytics, to provide retailers and consumers with superior products and shopping experiences.

''This acquisition complements our global business, which includes our iconic Post-it and Scotch brands, and will allow us to better serve our customers with accelerated product innovation,'' said Bill Smith, vice president and general manager, 3M office supplies division. ''In addition, OCP will build on 3M's strong and long-standing customer partnerships worldwide.''

On a GAAP-reported basis, 3M estimates the acquisition will be approximately $0.06 dilutive to earnings per share in the first 12 months following closing. Excluding purchase accounting adjustments and anticipated integration expenses, 3M estimates the acquisition will be $0.03 accretive to earnings over the same period.

The transaction is expected to be completed in the second half of 2012, subject to customary closing conditions including any necessary regulatory approvals.

3M has been on a major acquisition spree; its last acquisition in July 2011 was of GPI, the French manufacturer and marketer of home improvement products such as tapes, hooks, insulation and floor protection products and accessories for an undisclosed sum (See: 3M to acquire the Do-It-Yourself and Professional Business of GPI Group)

Earlier in December 2010, it acquired Switzerland's precision grinding technology supplier Winterthur Technologies AG (WTG), for about $448 million (See: 3M to acquire Switzerland's Winterthur Technologies for $448 million), barely a fortnight after closing the acquisitioin of fingerprint identification system firm Cogent Inc for $943 million. (See: 3M completes acquisition of Cogent Inc) and a a day later agreed to acquire Israel's Attenti Holdings SA from an investor group led by private-equity firm Francisco Partners for $230 million in cash. (See: 3M to acquire remote monitoring technology firm Attenti Holdings for $230 million)

Two months earlier in October, it acquired patient warming products maker Arizant Inc, in an $810-million deal (See: 3M acquires Arizant Inc)