MONTREAL – Domtar Corp. (TSX:UFS) has signed a $272-million deal to buy Associated Hygienic Products, a U.S. maker of store brand infant diapers, from DSG International.

Domtar estimates that its personal care division will see $10 million in annual savings within two years of the deal, benefiting from lower purchasing costs, lower general and administrative costs and a sharing of best practices.

AHP has a 376,000 square foot manufacturing plant in Delaware, Ohio and a 312,000 sq. ft. manufacturing facility in Waco, Texas.

The 621-employee company, which had $320 million of annual sales, also has administrative offices and a distribution centre in Duluth, Ga.

The deal is expected to close in the second quarter of this year, subject to closing conditions.

“The market for store brand infant diapers is growing steadily in North America driven by high quality products and a strong value proposition,” Domtar president and chief executive John Williams said in a statement.

“The acquisition of AHP will provide meaningful market expansion opportunities and innovative product development capabilities with our existing personal care business, as well as synergies to the bottom line.”

Domtar manufactures and sells a wide variety of wood fibre products including office, specialty and packaging papers and adult incontinence products.