Avery Dennison to acquire Paxar for $1.3 billion or $30.50 per share

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Avery Dennison Corporation and Paxar Corporation have 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 Dennisons 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. Paxars 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.

Avery Dennisons Retail Information Services (RIS) business represents one of its fastest-growing units. RIS provides brand identification and supply chain management solutions primarily for manufacturers and retailers, including tag and label design and printing; inventory and shipment tracking; and data management systems.

This combination will give us the capabilities, products and geographic reach to pursue new segments of the global retail information and brand identification market.  These segments include retailers and manufacturers serving local customers in India and China, said Mr. Scarborough.

Combining with Avery Dennison provides substantial benefits to our customers while delivering compelling value to Paxar shareholders, added Rob van der Merwe (pictured), 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.

Customer Benefits
In this evolving marketplace, it is increasingly important to be close to
the local manufacturing clusters, the two companies said. With their
complementary geographic footprints, in particular with Paxars greater
focus on Europe, the acquisition improves the combined Companys ability to
serve customers in Europe, Latin America, the Middle East and Asia.

Lower-cost production and higher levels of quality and speed of
delivery will be crucial for winning against the local and regional
competition we face at the buying office and factory levels, said Mr.
Scarborough. This combination will benefit the factories that purchase our
tickets and tags as well as the retailers and the brand owners they supply.

Financial Terms
Under the terms of the agreement, Avery Dennison will purchase each common
share of Paxar for $30.50.  Based upon Paxars 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.

Cost Savings/Accretion
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.

Closing Terms and Conditions
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

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.

About Avery Dennison Corporation

Avery Dennison is a global leader in pressure-sensitive labeling materials,
office products and retail tag, ticketing and branding systems.  Based in
Pasadena, Calif., Avery Dennison is a FORTUNE 500 Company with 2006 sales of
$5.6 billion.  Avery Dennison employs more than 22,000 individuals in 49
countries worldwide who apply Avery Dennisons technologies to develop,
manufacture and market a wide range of products for both consumer and
industrial markets.  Products offered by Avery Dennison include Avery brand
office products and graphics imaging media, Fasson brand self-adhesive
materials, peel-and-stick postage stamps, reflective highway safety
products, labels for a wide variety of automotive, industrial and durable
goods applications, brand identification and supply chain management
products for the retail and apparel industries, and specialty tapes and

About Paxar Corporation

Paxar is a global leader in providing identification solutions to the retail
and apparel industry, worldwide. Paxars leadership in brand development,
merchandising, information services and supply chain solutions enables Paxar
to satisfy customer needs around the world.

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