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Avery Prices $250M Senior Notes

Zacks Equity Research

Avery Dennison Corporation (AVY) has unveiled the pricing of $250 million of 3.35% Senior Notes due 2023. The underwritten public offering has been priced at 99.898% of the principal amount.

Avery will use the net proceeds from the offering to repay the existing debt under its commercial paper program. Depending on customary closing conditions, the offering is expected to close on Apr 8, 2013.

Merrill Lynch – a subsidiary of Bank of America Corporation (BAC), Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC – a wing of JPMorgan Chase & Co. (JPM), RBS Securities Inc. and Wells Fargo Securities, LLC – a unit of Wells Fargo & Company (WFC), will serve as joint book-running managers for the notes offering, while HSBC Securities (USA) Inc. and Mitsubishi UFJ Securities (USA), Inc. will act as co-managers.

Avery’s total debt increased around $41 million in 2012 to $1.22 billion compared with $1.18 billion in 2011, reflecting an increase in commercial paper borrowings to support operational requirements and fund share repurchases. Avery had cash and cash equivalents of $235.4 million as of Dec 31, 2012.

Moreover, debt to total capitalization stood at 43.6% in 2012, an increase of roughly 200 basis points from 2011. The company has $251.9 million of debt maturities due in 2013.

Pasadena, Calif-based Avery manufactures pressure-sensitive materials, tickets, tags, labels and other converted products. Avery has over 200 manufacturing and distribution facilities encompassing more than 60 countries. Its clientele is spread across the U.S., Europe, Asia, Latin America and other regions.

With the divestiture of the underperforming Office and Consumer Products unit, Avery will be able to focus on its market-leading, pressure-sensitive materials business and Retail Branding and Information Solutions segment.

Avery currently retains a short-term Zacks Rank #2 (Buy).

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