In a bid to expand its personal care business,
) recently signed a deal to acquire Associated Hygienic Products
(AHP) from DSG International for $272 million. The deal is
expected to close by second quarter 2013.
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AHP manufactures infant diapers in the U.S. and has a strong
presence in retail distribution channels. The company operates
two manufacturing facilities in Del., OH and Waco, TX. It has a
distribution center in Duluth, GA.
The successful integration of AHP will add high-quality products
to Domtar's product range. Moreover, the acquisition is a big
boost to Domtar's Personal Care divison, whose annualized
earnings before interest, taxes, depreciation and amortization
(EBITDA) is expected to cross $200 million by 2017. The
acquisition also complements Domtar's plans of having annualized
EBITDA of $300-$500 million from growing businesses over the next
The acquisition is a strategic move by the company to expand its
North American footprint with an increasing demand for
high-quality infant diapers in the region. The acquisition is
expected to provide annualized synergies of $10 million within
two years from lower purchasing costs, reduced general and
administrative costs, and sharing of best practices in
manufacturing and product development.
Domtar designs, manufactures, markets, and distributes
communication papers, specialty and packaging papers, and adult
incontinence products globally. In the last reported quarter,
Personal Care segment reported revenues of $111 million, up from
$70 million in the year-ago quarter.
Domtar currently has a Zacks Rank #3 (Hold). Other stocks that
look promising and are worth a look are
Resolute Forest Products Inc
) with a Zacks Rank #1 (Strong Buy) and
PH Glatfelter Co
), each carrying Zacks Rank #2 (Buy).