Domtar acquires AHP for $272 million

Montreal, Canada-headquarted Domtar Corporation – which dubs itself ‘the sustainable paper company’ – has made another significant move into the market for hygienic disposables based on nonwovens with the acquisition of privately-held Associated Hygienic Products (AHP).

Domtar wil pay $272 million to DSG International for AHP, which is the largest manufacturer and supplier of store brand infant diapers in North America.

The closing of the transaction is expected by the end of the second quarter of 2013, subject to customary closing conditions.

“The market for store brand infant diapers is growing steadily in North America driven by high quality products and a strong value proposition,” said said John D. Williams, president and CEO of Domtar. “The acquisition of AHP will provide meaningful market expansion opportunities and innovative product development capabilities with our existing Personal Care business, as well as synergies to the bottom line.

“This will be our fourth transaction in Personal Care in two years, and with it the division will reach over $200 million in earnings by 2017. This is part of our company-wide goal of having $300-$500 million in earnings from growing businesses over the next four years.”

AHP manufactures and markets infant diapers in the United States with established long-term relationships in the retail distribution channels. It operates two large modern facilities, a 376,000 square foot manufacturing facility in Delaware, Ohio, and a 312,000 square foot manufacturing facility in Waco, Texas. The company also has administrative offices and operates a distribution center in Duluth, Georgia. AHP has 621 employees and has annual run rate sales and EBITDA of $320 million and $31 million respectively.

It is anticipated that the integration to Domtar'ss Personal Care division will provide annualized synergies of $10 million within two years. The synergies will come from a combination of lower purchasing costs, a reduction in general and administrative costs and sharing of best practices in manufacturing and product development.

Domtar manufactures, markets and distributes a wide variety of fibre-based products including communication papers, speciality and packaging papers and adult incontinence products. The foundation of its business is a network of world class wood fibre converting assets that produce papergrade, fluff and speciality pulps. The majority of its pulp production is consumed internally to manufacture paper and consumer products. Domtar is the largest integrated marketer of uncoated freesheet paper in North America with recognized brands such as Cougar, Lynx Opaque Ultra, Husky Opaque Offset, First Choice and Domtar EarthChoice. It is also a leading marketer and producer of a complete line of incontinence care products marketed primarily under the Attends brand name. Domtar owns and operates Ariva, a network of strategically located paper and printing supplies distribution facilities. In 2012, Domtar had sales of US$5.5 billion from some 50 countries. The company employs approximately 9,300 people.