UPDATE: Jefferies Raises PT on 3M to $94

Jefferies & Company has published a research report on 3M MMM and has raised the price target from $90 to $94 after the company announced plans to acquire Avery Dennison Corporation AVY. In the report, Jefferies & Company writes, "3M has entered into a definitive agreement to acquire Avery Dennison's Office & Consumer products business for $550m in cash, 5.8x LTM EBITDA. Given cost synergies and market share gains in the private label and branded office products markets, we estimate the deal could deliver a 23% ROIC by year 4. 3M has announced plans to acquire Avery Dennison's (AVY, $28.68, NC) $765m (2011 sales) Office & Consumer business for $550m cash, subject to post-closing adjustments. The deal values the business at 0.7x 2011E sales, 5.8x EBITDA, and 4.8x EBIT, or an estimated 3.3x EBITDA including synergies (estimated 9%-10% of sales by year 4). The transaction is expected to close in 2H12, pending customary closing conditions and any necessary regulatory approvals." Jefferies maintains its Buy rating on 3M which closed yesterday at $83.49.