Ontex’s last straw is called Attindas

The diaper manufacturer Ontex has for years been the victim of poor management and a toxic mix of high debt and shrinking cash flow. Four years after rejecting grants from the investment fund PAI, it hopes to reach an agreement with its anagram AIP and the manufacturer of hygiene products Attindas. This time it is necessary.

According to Ontex, the discussions are at an early stage and no agreement has yet been reached on the structure or terms of any transaction. There is no guarantee that such an agreement will be entered into and, if so, what terms and conditions apply.

The essence

  • Diaper manufacturer Ontex is in ‘exploratory talks’ with its US sector colleague Attindas about a merger.
  • The agreement is far from complete. Ontex is not in a strong position. On the contrary, it is a must.
  • Ontex announces its first quarter results on Thursday. The market can then get a little more details about the impending transaction.

Who approached whom? The diaper manufacturer, which announces its first quarter results on Thursday, so far confines itself to a brief press release.

According to a sector expert, Ontex has been looking for a solution to its problems for a long time and hopes to have found its salvation at Attindas. In any case, a trade must be backed by Ontex’s largest shareholders: GBL (19.98%) and the French asset manager ENA (15.1%).


According to ING, the two companies are complementary geographically and product-wise. ‘In Europe, however, competition problems are threatening to arise in several countries. Not in the US, where Ontex is not very strong in baby diapers, “says a sector expert. He also immediately asks himself what Attindas possibly plans to do with the Ontex activities in emerging markets that are for sale or will be discontinued. Striking: in September 2020, Ontex itself showed interest in the sheet metal division of the American paper manufacturer Domtar, from which Attindas originated (see effort

The bank’s analysts yesterday picked up a calculator. ‘If AIP applies the same conditions as when acquiring Domtar’s lead division last year, Ontex can value it at 14.80 euros per share. Including synergies, this can increase to 20.60 euros per. The question is whether that appreciation also applies to Ontex today.

In Europe, the merger of Ontex and Attindas poses a threat to competition in several countries.

The Belgian diaper manufacturer has been in trouble for some time, including changing management and failed takeover attempts. Four years ago, the board and management of the East Flemish group resolutely rejected an (indicative) proposal to take over the investment fund PAI of 27.5 euros per. It was subsequently revised slightly lower.

Since then, the stock has been in free fall. On Wednesday night, despite a jump of almost a quarter of an hour after the announcement of the talks with Attinda, it was worth 7.77 euros. “The board in 2018 is on its way – and not a little bit,” said one observer.

Recurring problems

Ontex’s problems are not new. De Tijd already wrote about the diaper company in 2007: ‘Ontex’ financial nightmare is due to three elements: Procter & Gamble’s strategy, the rising commodity prices and the price pressure from the supermarkets. ‘

Ontex is still lying sick in the same bed. Even more than then, it is split between strong competitors or niche players and rising commodity prices. Rising costs lowered the diaper manufacturer’s profit margin to a lot last year.

‘Ontex’ financial nightmare is due to fierce competition, rising commodity prices and supermarket price pressures. ‘ This passage from a 2007 Tijd article still applies 15 years later.

As a medium-sized player, Ontex has no pricing power. If competitors such as Pampers manufacturer Procter & Gamble, Essity or Kimberly Clark decide to lower their prices or introduce promotions, the Belgian group is forced to follow suit or risk losing sales and market share.

Meanwhile, inflation is hitting and commodity prices (oil derivatives and pulp) are going through the roof. To address these higher costs – and to restore margins that have deteriorated over the years – CEO Esther Berrozpe is rolling out a significant austerity plan. Last year, the gross cost savings amounted to 75 million euros. This year, she expects 60 million. But the voluntary Basque is fighting the worst: Inflation is cutting savings.

Debt-laden Ontex – which had a net debt of EUR 726 million at the end of last year – received a respite from its banks a few months ago and management is seeing an improvement on the horizon. But inflation continues to hit. Attindas can be your last chance for a safe haven.

From Domtar to AIP

Attindas is the former hygiene division of the Domtar paper group, which was acquired at the beginning of last year by the private equity player American Industrial Partners (AIP). He is also known in our country as the creditor of the faltering Indian magnate Sanjeev Guptas Duffel aluminum factory.

Ontex also came into the picture as a buyer, but the debt mountain of the then Belgian diaper manufacturer raised many questions. Getting into even more debt was not an option.

Attindas has a turnover of 970 million dollars (920 million euros). It produces and sells a wide range of hygiene products, from diapers for babies and incontinent adults to protective surgical clothing, both own and private label customers.

The company is led by Michael Fagan, a former head of consumer goods giant Procter & Gamble. He headed Domtar Personal Care for nine years before it fell to Attindas. NS

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