Domtar agrees to divest Personal Care business to AIP for $920m

11 January 2021 (Last Updated January 11th, 2021 12:48)

Fibre-based products supplier Domtar has agreed to divest its Personal Care business to private equity firm American Industrial Partners (AIP) for $920m.

Fibre-based products supplier Domtar has agreed to divest its Personal Care business to private equity firm American Industrial Partners (AIP) for $920m.

The agreement is in line with the company’s announcement made on 7 August, following a comprehensive strategic review of value-creating alternatives for the business.

With this move, Domtar aims to primarily focus on Paper, Pulp and Packaging business.

Domtar plans to use proceeds from the sale in reducing debt by approximately $600m.

Additionally, the company expects to repurchase approximately $300m in shares through share repurchase programme and open market repurchases.

Domtar president and chief executive officer John Williams said: “This transaction represents a milestone in Domtar’s ongoing portfolio transformation and further advances our strategic initiatives that will position Domtar for a sustainable and successful future.

“We conducted a thorough review of strategic alternatives for Personal Care and believe the sale maximises value to Domtar shareholders by allowing us to strengthen our balance sheet, enhance liquidity and buy back shares.

“The robust interest received reflects the excellent work by our team to improve profitability, gain new customers and enhance the operating structure and cost profile of the business.

“We are confident that AIP is the right owner to advance the business and look forward to working with them to execute a smooth and successful transition for the customers and employees of Personal Care.”

Completion of the deal is subject to regulatory approvals and other customary closing conditions, expected to close by the end of the first quarter of 2021.

Last April, Domtar closed the acquisition of the point-of-sale (POS) paper business from Appvion.