Domtar Buys AHP for $272 Million
Associated Hygienic Products, the largest manufacturer of private label infant diapers in the U.S., has been sold to Domtar Corporation, a Montreal-based maker of personal care and paper products.
Domtar said AHP would be integrated into the company’s personal care division, which currently makes adult incontinence items include the Attends brand. It expects the integration to provide annual synergies of $10 million within two years, achieved from lower purchasing costs, reduced general and administrative costs, and best practices improving 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,” Domtar Senior Vice President, Personal Care Michael Fagan said in a news release. “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.”
The transaction is expected to close in the second quarter.
“The market for store brand infant diapers is growing steadily in North America, driven by high quality products and a strong value proposition,” Domtar CEO John Williams said in the release. “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 annualized EBITDA by 2017.”
AHP operates two large facilities, a 376,000-square-foot manufacturing facility in Delaware, Ohio, and a 312,000-square-foot manufacturing facility in Waco, Texas, the release said. AHP also has administrative offices and operates a distribution center in Duluth, Ga. AHP has 621 employees and has annual sales of $320 million and EBITDA of $31 million respectively.
Domtar said in the release that AHP had 94 percent of its products in diapers, with 5 percent in training pants and 1 percent in youth pants. Domtar said the acquisition provided market expansion opportunities, and potential access to retail partners for its current adult incontinence line of products.