Office supplies maker Avery Dennison Corp. said Thursday that it would buy clothing label maker Paxar Corp. for $1.3 billion in a bid to expand in the fragmented retail information and brand identification market.
The deal values White Plains, N.Y.-based Paxar at $30.50 a share, a 27% premium over its closing share price Thursday of $24.03.
Avery President Dean Scarborough said the deal would result in lower-cost production and faster delivery time, which would help the Pasadena-based company win against local and regional competition.
Avery, which has a market value of about $7 billion, said it expected annual cost savings of $90 million to $100 million from the transaction, which it aims to achieve within 24 months of the deal's close.
The transaction is expected to close by year-end and is subject to approval by Paxar shareholders and regulators, the companies said.