Domtar to buy diaper maker to expand personal care business

Reuters

Nov 19 (Reuters) - Canadian paper and pulp products makerDomtar Corp said it would buy privately heldSpanish diaper maker Laboratorios Indas, as it tries to expandits personal care business and reduce exposure to weak pulpprices.

Domtar will pay 285 million euros ($386 million) to privateequity firms Portobello and Santander's Vista Capital to buyIndas. It will also repay most of Indas' 140 million euros debtafter the deal closes.

The acquisition, expected to close by the end of this year,will immediately add to earnings, Domtar said on Tuesday.

The company has been buying diaper makers in the UnitedStates and Europe for two years as pulp prices remained weak.Revenue from the company's personal care business jumped from$71 million in 2011 to $399 million in 2012, accounting for morethan 7 percent of it business last year.

However, Canada's Resolute Forest Products Inc - the largest newsprint maker in North America - saidlast month that pulp prices were improving, driven by risingdemand for tissue, particularly in China.

Indas, bought by the Spanish private equity firms in 2007for about 350 million euros, is Spain's top maker of sanitarynapkins and other hygiene products. It exports to severalEuropean countries as well as Latin America and Africa.

"With the addition of the new business, Domtar will becomeone of the leading adult incontinence products manufacturers inEurope," said John Williams, chief executive of Domtar.

Domtar shares, which were little changed in morning trade onthe Toronto Stock Exchange, have risen nearly 8 percent thisyear.

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