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Domtar acquires Associated Hygienic Products



Published May 30, 2013
Related Searches: fiber incontinence converting Adult Incontinence
Domtar Corporation has signed a definitive agreement for the acquisition of privately held Associated Hygienic Products (AHP), the largest manufacturer and supplier of store brand infant diapers in the U.S., from Disposable Soft Goods (DSG) International for $272 million. The closing of the transaction is expected by the end of the second quarter of 2013.

“The market for store brand infant diapers is growing steadily in North America driven by high quality products and a strong value proposition. 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,” says John Williams, president and CEO of Domtar. “This will be our fourth transaction in personal care in two years, and with it the division will reach over $200 million in annualized EBITDA by 2017. This earnings runway is part of our company-wide goal of having $300-500 million in annualized
EBITDA from growing businesses over the next four years.”

AHP manufactures and markets infant diapers in the U.S. with established long-term relationships in the retail distribution channels. AHP operates two large modern facilities—a 376,000 square foot manufacturing facility in Delaware, OH, and a 312,000 square foot manufacturing facility in Waco, TX. The company also has administrative offices and operates a distribution center in Duluth, GA. 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’s 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.

“This acquisition will add a key product line to our offering, a competitive manufacturing base to our existing footprint and solid access to the retail channels for our adult incontinence products,” says Michael Fagan, senior vice president, personal care, Domtar. “AHP invests heavily in research and development and brings to the marketplace quality products, a highly trained workforce and the know-how to service large retailers. I am also impressed with the substantial investments made in the past five years in the facilities which will limit the capital requirements for the foreseeable future.”

Domtar Corporation designs, manufactures, markets and distributes a wide variety of fiber-based products including communication papers, specialty and packaging papers and adult incontinence products. The foundation of its business is a network of world-class wood fiber converting assets that produce papergrade, fluff and specialty 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. Domtar is also a leading marketer and producer of a complete line of incontinence care products marketed primarily under the Attends brand name. Domtar also owns and operates Ariva, a network of strategically located paper and printing supplies distribution facilities. In 2012, Domtar had sales of $5.5 billion from some 50 countries. The company employs approximately 9,300 people.