Asia’s largest hygiene products company, Unicharm Corporation has signed an agreement for it to acquire entire shares of DSG (Cayman) Limited (“DSGCL”), the holding company of DSG International, a manufacturer of diapers and other absorbent products in South East Asia. The deal, which is said to be worth $530 million,  represents one of Unicharm’s largest overseas acquisitions ever, and will significantly bolster Unicharm’s lineup of low- and mid-priced diapers in Southeast Asia, while also adding production capacity in new countries for the Tokyo, Japan-based company.

DSGCL Group manufactures disposable diapers for babies and adults, with  locations in Thailand, Malaysia, Indonesia and Singapore. DSGCL’s baby diaper brands include BabyLove, Fitti and PetPet, while its adult diaper brands include Certainty.The company is reportedly the leading adult diaper manufacturer and second largest maker of baby diapers in Thailand and has been working hard to close the gap between itself and its future owners. In 2016, the company launched Baby Love nanopower, diapers featuring a patented mega thin sheet and followed this launch with a pant style diaper.

Last year, the company reportedly achieved sales of $253 million.

Unicharm developed its 10th Medium-Term Management Plan in 2016 with the aim to accelerate the globalization and  growth of its business. Under the plan, Unicharm aims to increase its consolidated net sales of to ¥800 billion or $7 billion, representing a compounded annual growth rate of  7%, a core operating margin of 15% and an ROE of 15%, while addressing a number of social issues. As Unicharm works towards these goals, Unicharm has proactively expanded its business especially in high growth markets in Asia, as an important part of its strategy to concentrate on priority countries and regions.

The integration of the DSGCL Group into Unicharm will help expand and improve its product lineup, enhance its market position and realize the economies of scale in the Southeast Asia region, particularly in Thailand and Malaysia. Unicharm also expects the acquisition to generate cost and other synergies through integration of logistics and other functions and ultimately drive growth in the Southeast Asian region.

Unicharm has been steadily growing its Asian business outside of Japan. The company acquired Vietnamese hygiene products producer Diana in 2011 and Myanmar Care Products in 2014 and has invested steadily in greenfield operations in fast-growing markets like China and India in recent years. Last year, its sales outside of Japan represented just under 43% of its total business.

Earlier this year Unicharm CEO Takahisha Takahara told Nonwovens Industry that the importance of the Southeast Asian market is high due to a growing young population as well as increasing consumption of disposable products per capita. “The use of disposable diapers and sanitary products is still premature and high growth is expected,” he said. “In this sense the important of Southeast Asian countries is high.”