Domtar to buy US diaper maker Associated Hygienic Products for $272 mn

Domtar Corp, North America's largest integrated producer of uncoated freesheet paper,  yesterday agreed to buy privately held diaper maker Associated Hygienic Products (AHP) from DSG International for $272 million.

Georgia-based AHP, the largest manufacturer and supplier of store brand infant diapers in the US, operates two large modern facilities at Delaware, Ohio and Waco, Texas.

It has 621 employees and annual sales of $320 million.

Montreal-based Domtar said that AHP, which will be integrated to its Personal Care division, will generate annual synergies of $10 million within two years.

It expects the synergies to 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.

The acquisition will expand Domtar's Personal Care division North American footprint and product range.

"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," said John Williams, president and CEO of Domtar.

Commenting on the benefits of the acquisition, Michael Fagan, senior vice-president for personal care products, said "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.''

''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," he added.