26 May 2011 - Pasadena (CA), USA
Rumours are circulating over the future of Avery Dennison following the company’s cancellation from a JP Morgan conference.
As a result its shares moved higher as speculation grew over an unconfirmed takeover of the company.
The news comes on the heels of Avery’s weak first quarter results, which were announced at the end of last month.
The firm’s Office and Consumer Products (OCP) sales fell by 13% in the first quarter to $156.4 million while operating income margin (OIM) slumped by more than 90% to just 1%.
Avery CEO Dean Scarborough had maintained his confidence in the company at the time saying that he believed results would improve during the second half of the year.
Don't be alarmed - none of us "know" anything, we are just speculating. My personal speculation would be that it's more likely they would be divesting something, than buying something or being bought out: The market is good and the logical thing for Avery to do would be to raise some cash and get more focused on businesses where they have a long term advantage.
But perhaps they are doing nothing, since these rumors go around all the time about Avery. We've all got our speculations about what might be going on, if anything is.
Any company can be bought or sold at any time, so don't live your life in fear of it happening, or based on rumors. That's my advice.
Thanks for your wishes; I am not or never been a trader. I have been retired more than 10 years, my only sales of assets have been what is required by IRS for the annual distribution to pay the deferred taxes. My decision to sell AVY was to pay down a loan rather than a loss in confidence in AVY. But that said, I still think that AVY assets (facilities, people and technology) make AVY a steal
Thanks for the insight about AVY, I am new to AVY.
Since AVY canceled the JPM CC in the last minute,
I assume something has happened. I did not buy BUCY
early last NOV when BUCY canceled a GS CC, thought
nothing matters, I was wrong, BUCY was sold in two
weeks. I may be wrong this time about AVY too, but
things happen for reasons unknown to us first, so
just to take a very small chance that some one may
buy AVY out in a few weeks, I even guess a date the
buyout will occur, if nothing happens by that date,
I will move on, win or lose. Hope some one see the
good assets you see and do a good better job to find
profitable markets to take advantage of them and
create value for share holders. Good luck!
AVY has great facilities, excellent manufacturing people and outstanding research scientists; I think they lack management knowledge of how to find a profitable market(s) to take advantage of AVY assets. That said, I think the people would be better off if AVY was acquired by a company with a superior leadership. I sold my AVY stock last week to put the funds in a better place. I wish all my AVY friends a future as good as my AVY career was.
The three manufacture industy buyout deals since
last year I check out are:
1. failed ARG takeover, APD wanted to gain market shares,
offered At $60 first, increased to $70, no deal, ARG said
2. LZ was bought out for its strong cash follow, and pricing
power for LZ's specialty chemicals, Berkshire Hathaway got LZ
3. BUCY is sold to CAT, CAT wants to expand mining equipment
AVY is close to ARG and BUCY in terms of growth, EBDTA, net profits.
The problem for AVY is any company really want AVY, if there are
synergies for the buyer, it is great and cheap to buy here, the buyer
can cut lot of costs and sell off unwanted divisions. PE firms may
want to buy them for a LBO, cut cost, sell off unwanted business, and
IPO the good growing and higher margin business few year later for
a higher market valuation. All my speculation only!
Only Boomberg, WSJ or Reuters report creditable
buyout news, rest of them just rumores. Jump in
because the CC cancellation regardless the reason,
AVY is fairly valued, not much to lose, much to
gain if AVY does sell out which has to be about
$55, I know the chance is close Zero just because
only one or two companies may be benefiting buying
AVY, and they do not really need AVY, but is cheap
to buy and gain the leading PSM markets in US and
emerging markets, Merrill Lynch likes AVY for it's
manufacture in India, good for India and China growing
Yes, more likely bad news for shareholders than good, if something is up. But we shall see.
On the broader issue of trading on rumors, it's a foolish game. First, if you trade on a rumor and it turns out to be true, you have broken the law and could go to prison. Secondly, by the time illegal insider information makes it to a website, everyone knows it if there is any truth to it. That's why in 35 years of stock investing I've never done rumors - you don't need them to succeed, they are illegal, and most of the time they are untrue. In fact, I would say that people who pay attention to rumors are mostly neophytes or unsuccessful investors.
I will add DuPont (DD) to the list of potential
buyers for AVY. we are all speculate here.
"May 25, 2011 4:01 PM EDT
Avery Dennison (NYSE: AVY) tells Bloomberg that it pulled from an upcoming JPMorgan conference due to scheduling conflict. Shares of AVY are up 1% on takeover speculation after pulling from the conference, but off the highs."
I do not believe the reason for canceling the CC, may be I am reading
too much of the cancellation, bought in today and risk is low here any way,
feel some thing is happening here.