Domtar to Acquire Spanish Incontinence Products Manufacturer Indas

Indas is leading branded incontinence products manufacturer and marketer in Spain.

Nov. 19, 2013 (Press Release) - Domtar Corporation today announced the signing of a definitive agreement for the acquisition of privately-held Laboratorios Indas, SAU ("Indas"), a leading branded incontinence products manufacturer and marketer in Spain.

Domtar will acquire all the outstanding capital stock for EUR285 million and the business is expected to have approximately EUR140 million of debt, net of cash, at closing. The net debt is expected to be reduced by the collection of approximately EUR25 million of past due accounts receivable2 before year-end or early 2014, resulting in an enterprise value of EUR400 million. The majority of the debt will be repaid by Domtar in connection with the closing of the transaction.

"The acquisition of Indas advances our transformation into a leader in Personal Care, an attractive market segment that is an important growth engine for Domtar," said John D. Williams, President and CEO of Domtar. "With the addition of the new business, Domtar will become one of the leading adult incontinence products manufacturers in Europe, providing the critical mass upon which to build a pan-European business. As a result of this transaction, we are substantially closer to achieving our previously stated goal of generating at least $300 million of EBITDA from fiber based consumer products by 2017. As we continue on our journey to further expand in growth markets, we remain committed to returning the majority of free cash flow to shareholders."

Michael Fagan, Senior Vice-President, Personal Care said "Indas is a leading marketer of adult incontinence care products in Spain with its IncoPack and IndasecŪ line of products, and we are pleased to be adding these prominent brands to our portfolio. The combination of our strong franchise in Northern Europe with Indas' best-in-class adult incontinence products business in Southern Europe promises to deliver solid results."

With a primarily branded product offering, Indas has a leading market position across a number of adult incontinence segments in Spain including heavy incontinence and underpads as well as branded light incontinence. They also produce a wide range of absorbent-related hygienic and medical products. Indas distributes its products in three main channels: pharmacies, hospitals and retail. They operate a modern manufacturing facility located in Toledo, Spain, ideally situated to serve the Iberian Peninsula and to expand in Southern Europe. Indas, after giving effect to its acquisition of a business earlier in 2013, has estimated annual run rate sales of approximately EUR190 million and EBITDA of approximately EUR46 million.

Commenting on the acquisition, Javier Martin, Chief Executive Officer of Laboratorios Indas, SAU said, "The acquisition by Domtar is a great outcome for our customers and our employees. Domtar is a strategic long-term owner who is committed to growth in Personal Care and they will give us access to the resources and the technology to accelerate our growth plans and be successful."

We expect the acquisition to be accretive to Domtar earnings from day one and to enhance the overall profit margins of Domtar's Personal Care business segment. Domtar will use cash on hand and available sources of borrowing to finance the acquisition. The closing of the transaction is expected by year-end 2013, subject to customary closing conditions, including the notification required by the Spanish antitrust authorities. Lazard has acted as sole investment banker to the company in connection with the transaction.

NOTES:
1 The Euro to U.S. dollar foreign exchange rate was 1.3517 as at November 18, 2013 (European Central Bank).
2 Indas has approximately EUR25 million of trade accounts receivable past due from local regional governments to be paid in one-time special payments, in conjunction with a royal decree aimed at accelerating government payments to suppliers.

SOURCE: Domtar