Domtar Corporation, a leading provider of fibre-based products, is selling its Personal Care business to American Industrial Partners (AIP) for $920 million. The two have signed a definitive agreement in this connection. Domtar now plans to focus on building an industry-leading paper, pulp and packaging company to deliver long-term shareholder value.

The sale of Domtar’s Personal Care business represents the culmination of a process announced on August 7, 2020, during which the company undertook a comprehensive strategic review of value-creating alternatives for the business. With this sale, Domtar is reinforcing its focus on building an industry-leading paper, pulp and packaging company to deliver long-term shareholder value.

“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,” said John D Williams, president and chief executive officer of Domtar. “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.”

Williams continued, “The sale is an important component of our strategic plan and will provide us with additional capital and resources to strengthen and invest in the future of Domtar, leading to a more focused business portfolio. We are making solid progress with the conversion of the Kingsport, Tennessee mill, and are excited about the prospects for building a large, value-added packaging business. We expect construction to officially begin at Kingsport in the second quarter of 2021, setting the stage for the completion of North America’s premier lightweight containerboard facility, with the ability to produce and market approximately 600,000 tons of high-quality recycled linerboard and corrugated medium, by the end of 2022.”

Domtar is executing on a clear plan to create long-term shareholder value by refocusing its portfolio around paper, pulp and packaging. Domtar has begun to execute its strategic plan to enter the containerboard market with highly competitive assets and a differentiated go-to-market strategy. The Kingsport conversion provides the company with a strategic entry point to build an up to 2.5 million ton-business and become a long-term strategic supplier to the packaging industry.

Domtar has developed plans to build containerboard into a significant revenue contributor over time, while maintaining secure and stable cash flow through its industry-leading paper and pulp businesses. In paper, Domtar has a leading market position in North America with well invested, low cost paper mills. Paper has generated attractive returns even in the most challenging environments, and Domtar expects it will remain a reliable and highly cash generative business in the coming years. In pulp, Domtar will focus on segments with the highest growth profiles, including the hygiene, tissue and towel markets, and has the opportunity to further enhance its performance through strategic investments.