Avery to Acquire Yongle Tape for $190 MillionMonday, February 6, 2017
Pressure-sensitive materials and label provider Avery Dennison Corp. in Glendale will acquire Chinese specialty tape manufacturer Yongle Tape Co. Ltd., the companies announced on Monday.
In addition to the $190 million purchase price, which will be funded through a combination of cash and credit facilities, Avery Dennison has agreed to pay up to $55 million in earnouts over the next two years upon Yongle’s completion of certain performance targets. The company plans to use Yongle’s products, such as the cable harnessing and insulation tapes it supplies to automakers, to expand its industrial materials business.
“(The acquisition) will build on our position in the global automotive sector and strengthen our overall product offerings with a range of industrial customers,” Mike Johansen, vice president and general manager of Avery Dennison’s industrial and health care materials businesses, said in a prepared statement.
Health care and industrial materials accounted for about $111 million of the company’s $1.1 billion in net sales during the fourth quarter of 2016, an 8 percent decline from the same period a year prior, according to Avery Dennison’s filings with the Securities and Exchange Commission. The results stemmed from an expected drop in its health care business, which offset growth in industrial markets, the company said in its quarterly earnings report.
Avery Dennison employs more than 25,000 workers globally and reported $6.1 billion in sales for 2016. The company’s stock rose 46 cents, or less than 1 percent, on Monday to close at $79.51 on the Nasdaq.