Avery Dennison to Acquire Paxar

PASADENA, Calif. & WHITE PLAINS, N.Y.—Avery Dennison Corporation and Paxar Corporation announced that their boards of directors have unanimously approved a definitive agreement for Avery Dennison to acquire all outstanding shares of Paxar for $30.50 per share in a cash transaction valued at approximately $1.34 billion. The transaction is expected to enhance Avery Dennison’s ability to compete and grow in the fragmented, expanding $15 billion-plus global retail information and brand identification market.

“This combination is a terrific strategic fit,” said Dean A. Scarborough, president and chief executive officer of Avery Dennison. “Paxar’s highly complementary capabilities advance our strategy to deliver exceptional products and superior service to customers at every level of the global retail supply chain, and to increase efficiency and reduce costs in a rapidly changing and increasingly competitive global marketplace. In addition, this acquisition will allow us to invest in product innovation and services that will serve our existing customers even better.”

“Combining with Avery Dennison provides substantial benefits to our customers while delivering compelling value to Paxar shareholders,” added Rob van der Merwe, chairman, president and chief executive officer of Paxar Corporation. “In particular, the broader capabilities of the combined Company will better meet customer demands for improved quality, product innovation and speed of delivery. Although we understand that some jobs will be affected through the integration of our businesses, employees of the combined Company will have expanded opportunities as part of a larger organization.”

Under the terms of the agreement, Avery Dennison will purchase each common share of Paxar for $30.50. Based upon Paxar’s closing price of $24.03 on Thursday, March 22, 2007, this represents a premium of 27 percent. JPMorgan Chase Bank, N.A. has committed $1.35 billion in acquisition financing and will also arrange long-term financing.

Avery Dennison expects approximately $90 to $100 million in annual cost savings, with similar infrastructure enabling the elimination of redundant production costs and reductions in selling, general and administrative expenses, including corporate overhead and back office support. Avery Dennison currently estimates that there will be integration costs, including restructuring and asset impairment charges ranging from $100 to $125 million, plus information technology (IT) integration costs and other IT investments of at least $50 million. Excluding these costs, the transaction is expected to turn accretive to earnings per share within one year following the close of the transaction. Avery Dennison management has a successful track record of integrating international acquisitions and achieving significant cost synergies. Avery Dennison expects to realize its targeted savings within 24 months following the close of the transaction.

The two companies will develop an integration plan that retains the best systems and people from both organizations. “While there will be a reduction in overlapping positions, employees will be part of a stronger, more rapidly growing global business,” said Mr. Scarborough. “We plan on retaining top-notch talent to ensure that we are the best in the industry.”

The transaction is expected to close by year-end and is subject to Paxar shareholder approval, as well as regulatory approvals in the U.S. and other countries. J.P. Morgan Securities Inc. acted as exclusive financial advisor to Avery Dennison, and Wachtell Lipton Rosen & Katz and Latham & Watkins LLP acted as legal advisors. Goldman, Sachs & Co. acted as exclusive financial advisor to Paxar, and Kirkland & Ellis LLP acted as legal counsel.