UPDATE 1-Domtar to buy diaper maker to expand personal care business

Tue Nov 19, 2013 10:25am EST

Nov 19 (Reuters) - Canadian paper and pulp products maker Domtar Corp said it would buy privately held Spanish diaper maker Laboratorios Indas, as it tries to expand its personal care business and reduce exposure to weak pulp prices.

Domtar will pay 285 million euros ($386 million) to private equity firms Portobello and Santander's Vista Capital to buy Indas. It will also repay most of Indas' 140 million euros debt after 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 United States 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 more than 7 percent of it business last year.

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

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

"With the addition of the new business, Domtar will become one of the leading adult incontinence products manufacturers in Europe," said John Williams, chief executive of Domtar.

Domtar shares, which were little changed in morning trade on the Toronto Stock Exchange, have risen nearly 8 percent this year.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article