Ontex Group has entered into a binding agreement to sell its Mexican business activities for approximately €285 million to Softys S.A., a personal hygiene company with operations across Latin America. Softys is a wholly owned subsidiary of Empresas CMPC S.A., headquartered in Chile.

The deal does not include Ontex’s Tijuana operation, which it acquired from Mabesa in 2016, and is considered an integral part of the company’s North American supply chain footprint. Ontex’s facility in Puebla, Mexico as well as its business in Mexico and related exports to regional markts are included in the deal.

The divestment is an important milestone in Ontex’s new strategy announced in December 2021 to focus on its Partner Brands and Healthcare Business, and accordingly to explore strategic alternatives for its branded business in emerging markets. In recent years, the Tijuana site has become a contract manufacturing hub for Ontex’s partner brands business. Earlier this month, the company announced it had added a new site in North Carolina, intended to complement the Tijuana site and expand its partner brands business.

“This divestment represents a major milestone in our strategy to reshape our portfolio,” Esther Berrozpe Galindo, CEO, says. “The proceeds from the sale will contribute to reducing our net debt and strengthening our balance sheet. I am convinced that Softys, with its 40 years of experience in the personal hygiene market in Latin America, is well placed to take the business forward, benefiting from the talent and expertise of our team in Mexico.”

Ontex’s Mexican business is being sold at an enterprise value of €285 million including a deferred payment of €25 million, spread over a maximum of five years. Aggregate net cash proceeds, after the impact of taxes, transaction expenses and balance sheet adjustments are estimated at approximately €250 million, and will be exclusively applied to reduce debt. 

The business being sold develops, manufactures and distributes baby diapers, baby pants, adult diapers and feminine hygiene products, marketed through the brands BBTips, Chicolastic, Kiddies, BioBaby and others. It has approximately 1300 employees and generated sales of €360 million in 2021. 

Ontex and Softys aim to close the transaction, which is subject to the customary conditions, including the applicable merger clearance approvals, by early 2023.