Canadian specialty paper maker Domtar, Inc. (UFS) said Tuesday that it is spending $272 million to buy privately held diaper maker Associated Hygienic Products from DSG International as it looks to expand its personal care business. Operating large facilities in Delaware, Ohio and Waco, Texas, Associated Hygienic Products, or AHP, is the largest manufacturer and supplier of store brand infant diapers in the U.S.

AHP generates about $320 million in sales annually with $31 million in earnings before interest, taxes, interest, depreciation and amortization, commonly known as EBITDA.

The latest acquisition is the fourth in two years in the personal care industry for Domtar as the company has been diversifying to shield itself from weak pulp prices in its primary paper business. The company started the acquisition string by acquiring Attends Healthcare Inc., a maker of incontinence undergarments, from KPS Capital Partners for $315 million in August 2011.

With the latest purchase, Domtar says that its Personal Care segment will now reach over $200 million in annualized EBITDA by 2017, a big part of a company-wide goal of $300 million to $500 million in annualized EBITDA from growing businesses by 2017.

“This acquisition will add a key product line to our offering, a competitive manufacturing base to our existing footprint and solid access to the retail channels for our adult incontinence products,” said Michael Fagan, Senior Vice-President, Personal Care at Domtar.

Montreal-based Domtar said it expects the transaction to be closed in the second quarter.

Domtar also bought EAM Corp., a producer of high quality absorbent composite material, in May 2012 from $61 million to gain access to core materials used for products such as feminine hygiene, diapers, puppy pads and adult incontinence. The purchase helped the company expand from its traditional pulp roots into a sector producing fluff pulp for the a wide array of products such as the aforementioned, in addition to dissolving pulp, which is used in the textile industry.

Domtar, one of North America’s largest suppliers of freesheet office paper used in printers, copiers and fax machines, reported worse-than-expected net and adjusted earnings in the first quarter with net profits of $45 million, or $1.29 per share, up 60 percent from $28 million, or 76 cents per share, in the same period in 2012. The quarter benefited from Domtar’s sale of its Port Edwards paper mill in Wisconsin to Ohio-based DMI Acquisitions LLC as well as a $15 million gain related to a conversion of tax credits. Adjusted earnings, a more closely followed measure of performance, slumped to $33 million, or 95 cents per share, from $61 million, or $1.65 per share, in the year prior quarter as the company was hit by costs associated with reconfiguration of a paper mill to produce a lighter specialty grade. Analysts expected adjusted earnings of $1.42 per share in Q1.

Sales for the quarter slipped by 3.8 percent to $1.35 billion, mildly below analyst expectations. Personal care products accounted for about $111 million of first-quarter revenue.

Meanwhile, Domtar hiked its dividend to 55 cents per share, up 22 percent from the prior quarter.

US-listed shares of UFS (Domtar also trades on the Toronto Stock Exchange under the same ticker) are down about 17 percent so far in 2013, including trading ahead in Tuesday action by 1.7 percent at $69.07 shortly after the lunch break.