With the purchase of the of the privately-held Attends Healthcare, Inc., Domtar Corporation hopes to double the earnings of the incontinence products manufacturer. Domtar recently purchased Attends from KPS Capital Partners, L.P. for $315 million. The closing of the transaction is expected during the third quarter 2011, subject to customary closing conditions. In 20-7, KPS Capital Partners purchased Attends from PaperPak Products.
"This is a good transaction that allows us to take measured steps into the consumer products market in a product area where high single-digit global growth is expected," says John Williams, president and CEO of Domtar. "We believe there is the potential to double Attends' earnings within five years and we are committed to unleashing the great organic growth potential. With this acquisition, we will consume internally some of our high quality Lighthouse fluff pulp produced in our nearby Plymouth, NC, mill. Domtar will continue to look for innovative ways to build growing businesses based on sustainable wood fiber."
Attends produces a complete line of incontinence care products and washcloths marketed primarily under the Attends brand name. The company offers more than 170 SKUs and serves a wide range of customers throughout the United States and Canada. The company operates a 775,000 square foot facility with nine production lines and a distribution center in Greenville, NC. Attends has approximately 330 employees, annual sales of approximately $200 million, and an estimated run-rate EBITDA of $39 million.
Michael Fagan, currently president and CEO of Attends Healthcare, Inc., will continue in this role. Commenting on the transaction, Fagan says, "I am delighted to join Domtar and to take the business to the next level of success. With strong commitment and support, the new ownership structure will allow us to realize the full potential of Attends."
The acquired business will be presented as a new reportable segment in Domtar's financial statements filed to the Securities and Exchange Commission starting in the quarter following the closing of the transaction. Domtar will use cash on hand to pay for the acquisition and intends to redeem most of Attends' outstanding debt upon closing of the transaction.