3M Co. scrapped an agreement to buy Pasadena-based Avery Dennison Corp.'s office products business, a deal the U.S. Justice Department opposed because of antitrust concerns.
The $550-million takeover would have given St. Paul, Minnesota-based 3M more than 80% of the U.S. market for labels and sticky notes, the Justice Department said in September. The announcement Wednesday follows a plan by 3M and Avery Dennison last month to "explore options" to respond to the department's concerns and win regulatory approvals.
"While we are disappointed with this turn of events, we remain focused, as always, on investing in product innovation," Jesse Singh, vice president and general manager of 3M's Stationery and Office Supplies Division, said in a statement.
3M had planned to complete the purchase in the second half of this year.
The Justice Department's investigation found that 3M and Avery have dominated adjacent parts of the office products business for many years, with Avery making labels and 3M selling sticky notes under its Post-it brand. The two companies are the largest label makers in the world, according to Deane Dray, an analyst at Citigroup Inc. in New York.
Both sides announced in January that they intended to strike a deal.
Avery Dennison fell 4.3% to $30.10 in after-hours trading following the announcement. 3M rose 0.3% to $93.78 at the close of trading.