3M's proposed acquisition of Avery Dennison's office and consumer products division has been scuttled.
Earlier in September, both companies declared that the arrangement was still on despite a statement from the US Department of Justice saying it would block the deal.
The reason for the termination of the deal has not been divulged by either of the companies. However, Avery confirmed that it will continue to search for a prospective buyer for its business.
The Justice Department had informed the companies that it would file a civil antitrust lawsuit to block the deal.
According to the government authority, the proposed merger would give 3M more than an 80 per cent share of both the US labels and sticky notes markets.
It said this would result in reduced competition in the labels and sticky notes market and would, in turn, lead to higher prices and reduced innovation for products that millions of American consumers use every day.
Avery Dennison's office and consumer products unit manufactures and sells a wide range of office and printable media products under the Avery Dennison brand.
In 2009, 3M, maker of Post-it Notes, entered into the labels market, intensifying the competition for Avery Dennison. In retaliation, Avery Dennison lowered wholesale prices, increased promotions and customer rebates and accelerated innovations in labels. Avery Dennison also started selling its own brand of sticky notes.
However, the business was affected due to weak end-market demand and increased competition.
Increased investment in demand creation, consumer promotions, and innovation, as well as lower volume hampered margins.
Consequently, in December 2011, Avery agreed to sell its office and consumer products group, for approximately US$550 million to 3M.
