Office supplies maker Avery Dennison said on Thursday it would buy clothing label maker Paxar for $1.3 billion, in a bid to expand in the fragmented retail information and brand identification market.
The deal values Paxar at $30.50 a share, a 27 percent premium over its closing share price on the New York Stock Exchange on Thursday of $24.03.
Avery president Dean Scarborough said the deal would result in lower-cost production and higher speed of delivery time, which would help the 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.
It expects the deal to add to its earnings per share, excluding integration-related charges, from 12 months following the transaction's close.
The deal is expected to close by the year end and is subject to approval by Paxar shareholders and regulators, the companies said.
Avery, based in Pasadena, California, makes products including Fasson adhesives, peel-and-stick postage stamps and reflective highway safety items.
Paxar, based in White Plains, New York, makes fabric care and content labels for clothing. It also makes labels, label printers and handheld labeler machines.