ST. PAUL, Minn. -- Office products makers 3M Co. and Avery Dennison Corp. said they have not cancelled the agreement for 3M to acquire Avery Dennison's office and consumer products operations and will work to address federal antitrust concerns and seal a deal.
The companies issued a statement late Tuesday in response to a Justice Department release saying the companies had dropped the proposed acquisition. They said they have withdrawn their application for antitrust clearance to work on addressing antitrust worries.
The proposed deal would have given 3M, maker of Post-It sticky notes, more than 80 percent of the U.S. business in both labels and sticky notes. The Justice Department had threatened to sue to halt the acquisition.
The government said the proposed acquisition, which includes Avery's label business, would have substantially lessened competition in the sale of labels and sticky notes, resulting in higher prices and reduced innovation.
The Justice Department's investigation found that 3M, based in St. Paul, Minn., and Avery, based in Pasadena, Calif., have dominated those areas of the office products business for many years -- Avery in labels and 3M in sticky notes. But 3M entered the labels market in 2009 and began competing with Avery. Avery responded by selling its own brand of sticky notes.
The companies said in January that 3M would buy the business from Avery for $550 million.
Avery Dennison's stock fell 26 cents to $29.34 in morning trading Wednesday. 3M's stock rose 9 cents to $91.77.