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Avery Dennison Plans German Venture

Consumer products: The Pasadena-based firm, seeking to expand sales in Europe, makes a deal to form a company with a top office supplier.

October 27, 1998|From Times Staff and Wire Reports

Avery Dennison Corp., looking to sell more of its office products in Europe, on Monday announced plans to form a new company with one of Germany's top office-supply companies.

The joint venture would combine Avery's office-products business in Europe with Steinbeis Holding's Zweckform Buro-Produkte unit, which had sales of $120 million in 1997 and is among the leading office-products brands in Germany.

Terms of the deal weren't disclosed. Pasadena-based Avery, which makes self-adhesive stamps, labels and other products, would hold a majority stake in the venture, to be called Avery Dennison Zweckform Office Products Europe and be based in Oberlaindern, Germany. The companies' products would be sold under their respective brand names.

Avery's European business, which includes an office-products unit and materials manufacturing, accounted for about 38% of its 1997 sales of $3.3 billion. Its biggest European markets are Britain, France and Italy, while Zweckform products are sold in Germany and other German-speaking countries.

"This strategic alliance between Avery Dennison and Zweckform solidifies our global expansion strategy in Europe," Avery Chief Executive Philip M. Neal said in a statement. "The new operation will enable us to introduce Avery-brand products to the rapidly growing German and Eastern European office-products markets where the Zweckform brand is well established."

Zweckform has nearly a 15% share of the $800-million office-products market in Germany.

Over the decades, Avery Dennison has expanded its reach, first entering Europe in the 1940s. In recent years, Avery has also invested tens of millions of dollars to expand in Asia and Latin America.

"We have been looking for a strategic partner with international market presence to complement Zweckform's strong position in German-speaking countries, and Avery Dennison provides an ideal match," said Rainer Kruger-Barvels, president of Steinbeis Holding.

Steinbeis had sales of $385 million in 1997. Zweckform products include labels, films and specialty papers for use with personal computers, desktop printers and copiers.

On Monday, Avery shares rose $1.06 to close at $42 on the New York Stock Exchange. The new venture is expected to add $120 million in sales for Avery, which posted net income of $55.8 million, or 54 cents per share, on sales of $860 million in the third quarter ended Sept. 26.

Avery has 16,100 employees in 200 manufacturing and sales facilities that make and sell Avery Dennison products in 89 countries.

Avery also said it will inaugurate later this week a plant in Gotha, Germany, to manufacture film materials for industrial labeling uses.

The companies expect to complete the venture by the end of this year, pending regulatory approval and due diligence, Avery said.

The joint venture would employ about 1,500 people.

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