3M, the office supply company whose best-known products include Scotch Tape and Post-it notes, has reached an agreement to acquire the product lines of Avery Dennison Corporation for $550 million, according to new reports.

San Diego mergers and acquisitions lawyers noted from the reports that 3M will pay for the deal with cash-on-hand.

Through the acquisition, 3M will further bolster its portfolio of office supplies and consumer products, strengthening its foothold in the industry. The purchase is expected to depress 3M's earnings by six cents per share in the 12 months following the finalization of the deal. The deal is expected to be closed in the second half of 2012.

Shares of both Avery Dennison and 3M rose by about three percent after the deal was announced. Avery Dennison, which is expected to report approximately $765 million in 2011 revenue and $95 in profit during the year, said it will use the received cash to pay off debt and buy back shares from stockholders.

Avery Dennison will still retain products that will keep the company afloat and profitable. The chief executive for the company said Avery maintains a strong balance sheet and is poised for positive growth in the near future.

The acquisition is the latest of several purchases 3M has made in the past year. It serves as further evidence that the company is determined to diversify its revenue streams to increase stability and profits for the company.

Source: Dealb%k "3M to Acquire a Unit of Avery Dennison" Jan. 3, 2012