Can Avery Dennison Successfully Integrate Paxar into its Business?
When Avery Dennison acquired its largest competitor in the retail information services industry, Paxar Corporation, the company was taking a large risk in concluding that it would be able to successfully integrate it into its long term plans and goals as well as make up the steep $1.3 billion cost (not to mention other types of fees and taxes). Although the company expects its RIS business to grow 5% in the medium to long-term because of this acquisition [31], the company also inherited new maintenance and energy costs, as well as a tremendous amount of debt. Short term debt increased three fold from $255M in 2006 to $1B in 2007 and long term debt doubled from $501M in 2006 to $1.1B in 2007. [17] To pay off the debt, Avery Dennison will have to cut back on spending and therefore decrease its investment in R&D as well as in other growth opportunities. In addition, any complications dealing with the integration of Paxar into the business would slow growth of the RIS business.
