Avery Dennison and Zweckform Form European Office Products Joint Venture.

PASADENA, Calif., and BRANNENBURG, Germany--(BUSINESS WIRE)-- Oct. 26, 1998--Avery Dennison Corp. (NYSE:AVY) (PSE:AVY) and Steinbeis Holding GmbH Monday announced that they have signed a definitive agreement to form a joint venture to manufacture and market office products throughout Europe.

The new operation will combine Avery Dennison's office products business in Europe, which sells office products under the Avery brand name, with Zweckform Buro-Produkte, a Steinbeis business unit and important German office products supplier. Zweckform-branded products had 1997 sales of approximately $120 million (DEM 195 million).

The joint venture agreement provides a majority ownership position for Avery Dennison, with Steinbeis maintaining a minority stake in the operation. It will be known as Avery Dennison Zweckform Office Products Europe GmbH, and will be based in Oberlaindern, Germany.

Both joint venture partners expect to realize synergies in research and development and manufacturing expertise, while achieving marketing, sales and distribution efficiencies. Avery Dennison and Steinbeis expect that these efficiencies will lead to substantial consumer benefits.

In addition, the geographic market positions of both companies are well balanced. Zweckform's established position in German-speaking countries complements Avery Dennison's market presence in other European nations.

"This strategic alliance between Avery Dennison and Zweckform solidifies our global expansion strategy in Europe," said Philip M. Neal, president and chief executive officer of Avery Dennison.

"The new operation will enable us to introduce Avery-brand products to the rapidly growing German and Eastern European office products markets where the Zweckform brand is well established. We are pleased to be joining forces with a company that has impressive brand awareness and a superb reputation among consumers for its commitment to product innovation and excellence."

"We have been looking for a strategic partner with international market presence to complement Zweckform's strong position in German-speaking countries, and Avery Dennison provides an ideal match," said Rainer Kruger-Barvels, president of Steinbeis Holding.

According to Charles D. Miller, Avery Dennison's chairman and former chief executive officer, the transaction is a defining step in the strategic vision the company has implemented to expand market presence in key regions throughout the world.

"This joint venture provides an excellent strategic fit," Miller said. "Growing our business in targeted markets in Europe by joining with a prominent and well-respected office products manufacturer like Zweckform is a milestone event for Avery Dennison and is consistent with our long track record of successful and well-planned global expansion and strategic alliances."

"Increasing our market presence in this region is especially opportune as the international trade borders in Europe are rapidly disappearing and a common currency is introduced at the beginning of 1999," said Neal. "This new operation will enable us to increase our sales base and distribution channels for labels, desk-top printing supplies and other products for office and home use throughout Eastern Europe.

"Along with the recent opening of our newest plant in Gotha, Germany, to manufacture film materials for industrial labeling applications, this transaction demonstrates Avery Dennison's commitment to our growth strategy in Europe," he said.

The transaction is expected to close by year end, pending regulatory approvals and due diligence. Terms of the agreement were not disclosed.

Avery Dennison, with sales of $3.3 billion in 1997, develops, manufactures and markets innovative self-adhesive solutions for consumer products and label systems. The Consumer and Converted Products sector, which includes the Worldwide Office Products business, generated sales of $1.8 billion in 1997.

Based in Pasadena, Calif., the company makes a wide range of products for consumer and industrial markets, including Avery-brand office products, Fasson-brand self-adhesive materials, peel-and-stick postage stamps, on-battery tester labels, automated retail tag and labeling systems, and specialty tapes and chemicals. Approximately 16,100 employees in 200 manufacturing and sales facilities produce and sell Avery Dennison products in 89 countries.

Zweckform Buro-Produkte GmbH is a member of the Steinbeis group of companies with consolidated sales of $385 million (DEM 636 million) in 1997. Zweckform products include labels, films and specialty papers for use with personal computers, desktop printers and copiers.