Avery Dennison to acquire Meridian flooring adhesives brands Taylor, Polycom, Frontier in strategic deal

Avery Dennison Corporation (NYSE: AVY) has entered into a definitive agreement to acquire the Flooring Adhesives Division of Meridian Adhesives Group, a portfolio that includes the established brands Taylor Adhesives, Polycom, and Frontier Products. The divestment marks a significant strategic shift for Meridian, which will sharpen its focus on its remaining global specialty adhesives and materials portfolio, while Avery Dennison strengthens its footprint in flooring solutions and high-value adhesive applications.

The transaction, announced on August 25, 2025, will see the Flooring Business integrated into Avery Dennison’s Materials Group segment. Both companies emphasized that employees, partners, and customers should expect a smooth transition with continued product availability, but underpinned by Avery Dennison’s broader scale and innovation capabilities.

Why did Meridian decide to divest its flooring adhesives division after years of expansion in the sector?

Meridian Adhesives Group, a Charlotte-based specialty adhesives player, had steadily built a strong flooring adhesives portfolio since acquiring Taylor Adhesives and expanding it with complementary brands such as Polycom and Frontier Products. Over the past decade, the company used a buy-and-build strategy to grow into multiple specialty verticals, ranging from construction to electronics and medical adhesives.

CEO Daniel Pelton stated that the decision reflected a deliberate pivot toward higher-margin global growth areas. By letting go of a successful but resource-intensive flooring segment, Meridian intends to redeploy capital into divisions where it sees faster technological advancement and stronger international expansion opportunities. This move mirrors broader industry dynamics, where mid-sized players increasingly narrow focus on niche high-performance chemistries instead of trying to compete across every category.

Historically, similar divestitures have reshaped adhesives portfolios. For instance, Henkel (ETR: HEN3) sold some underperforming consumer adhesive lines to concentrate on industrial and packaging markets, while H.B. Fuller (NYSE: FUL) divested construction adhesives in regions where it lacked scale. Meridian’s move fits this pattern, prioritizing global competitiveness and specialized innovation over broad but potentially diluted segment coverage.

How does the acquisition align with Avery Dennison’s Materials Group strategy and long-term growth ambitions?

For Avery Dennison, this deal is consistent with its multi-year strategy of deepening capabilities in high-value materials. The company, best known for pressure-sensitive labels, RFID, and functional materials, has steadily diversified into adjacent categories. The acquisition of Meridian’s Flooring Division strengthens Avery Dennison’s adhesives platform, giving it access to flooring customers across residential, commercial, and industrial markets.

Ryan Yost, President of Avery Dennison’s Materials Group, underscored that the flooring adhesives portfolio represents a “high-performing business that fits seamlessly” with its strategic roadmap. By absorbing Taylor Adhesives, Polycom, and Frontier Products, Avery Dennison enhances its reach into product lines where performance, durability, and innovation drive customer loyalty.

The Materials Group, which contributed around $5.6 billion in revenue in FY2024, has consistently delivered mid-single-digit organic growth. Analysts suggest that this acquisition could accelerate that trajectory, adding incremental revenue while improving Avery Dennison’s competitive positioning against rivals like 3M (NYSE: MMM) in industrial adhesives and Sika AG (SWX: SIKA) in construction chemistries.

What are the financial implications and how are investors reacting to Avery Dennison’s latest portfolio move?

Shares of Avery Dennison (NYSE: AVY) traded slightly higher following the announcement, with institutional investors interpreting the acquisition as accretive to growth. Although specific financial terms were not disclosed, analysts expect the Flooring Business to contribute positively to earnings within 12–18 months of integration, given its established market share and steady cash flows.

Investor sentiment has remained favorable toward Avery Dennison’s disciplined M&A strategy. The company has historically executed well on bolt-on acquisitions, such as its 2017 purchase of Yongle Tape in China and the 2021 acquisition of Vestcom, which strengthened its intelligent labeling and retail solutions capabilities. Market participants view the Meridian deal as an extension of this proven playbook.

From a buy/sell perspective, brokerages have reiterated “Hold” to “Moderate Buy” ratings on Avery Dennison, noting its strong balance sheet and consistent free cash flow generation. Foreign institutional investors (FIIs) have shown net inflows into the stock over the past quarter, reflecting confidence in Avery Dennison’s resilience amid global demand uncertainty. Domestic institutional investors (DIIs), however, have taken a more cautious stance, pointing to rising raw material costs that could compress margins.

What does this divestment signal about consolidation trends in the adhesives and specialty chemicals industry?

The adhesives sector has been undergoing notable consolidation as players seek scale, specialized technologies, and global reach. In recent years, acquisitions by Sika, Henkel, and H.B. Fuller have redrawn competitive lines, while private equity firms have actively built and reshaped portfolios.

Meridian Adhesives Group itself is owned by American Securities, a private equity firm known for scaling industrial platforms before pursuing strategic exits. Divesting the Flooring Division to Avery Dennison is consistent with private equity timing, especially after several years of value creation in the segment. It demonstrates how financial sponsors often cultivate businesses with the intention of spinning them off once synergies are maximized.

Industry experts suggest that more consolidation is likely in the specialty adhesives market, particularly as sustainability regulations, energy costs, and raw material volatility push smaller players to seek larger partners with global supply chain leverage. Avery Dennison’s acquisition underscores how large materials science companies are positioning themselves to offer end-to-end solutions, from labeling to flooring and beyond.

How will customers, employees, and partners be affected during the transition to Avery Dennison ownership?

Executives from both companies emphasized continuity. Ralph Grogan, Commercial President of Flooring at Meridian, reassured stakeholders that customers will continue to work with the same teams, products, and services, only now with the backing of Avery Dennison’s larger innovation pipeline and investment capacity.

Avery Dennison, for its part, has pledged to integrate the flooring adhesives operations into its Materials Group without major disruption. Historically, Avery Dennison has managed smooth integrations, maintaining operational cultures while scaling production and R&D. Employees are expected to benefit from being part of a global organization with broader career development opportunities.

Customers in the flooring sector may see accelerated product innovation, particularly in sustainability-driven adhesives that reduce volatile organic compounds (VOCs) and support green building certifications. The push toward eco-friendly flooring solutions is a key demand trend, and Avery Dennison’s resources could help the acquired brands remain competitive in this evolving regulatory and consumer environment.

What can be expected next for Meridian Adhesives Group as it reorients its portfolio strategy?

With the flooring adhesives unit sold, Meridian is likely to intensify investment in its other specialty verticals, including electronics, healthcare, and packaging adhesives. These categories typically command higher margins and faster growth rates, especially as electronic device miniaturization and medical material innovation create demand for advanced bonding solutions.

Analysts believe Meridian may pursue further international partnerships or targeted acquisitions in Asia and Europe, where specialty adhesives consumption is rising. The company’s parent, American Securities, has historically backed such global expansion plays to build valuation ahead of eventual exit opportunities, which could include an IPO or sale of the broader Meridian platform.

By exiting a mature, competitive segment like flooring adhesives, Meridian positions itself as a more agile specialist in high-growth adhesives applications. Industry observers will be watching whether the company can replicate the success it had with flooring in these newer segments.

The divestment of Meridian’s Flooring Division to Avery Dennison exemplifies how strategic focus and portfolio discipline are reshaping the adhesives and specialty materials sector. For Avery Dennison, it is a growth-oriented expansion into high-value adhesives. For Meridian, it is a pivot toward innovation-driven global categories. And for investors, it provides another case study of consolidation that is steadily redrawing the competitive landscape in materials science.