(All financial information is in U.S. dollars, unless otherwise noted.)

• Acquired business is the #1 supplier of store brand infant diapers in
  the United States
• Purchase price of $272 million, synergies of $10 million to be achieved
  within two years
• Dramatically expands the North American footprint and product range of
  our Personal Care division
• Transaction is expected to close in the second quarter of 2013

TICKER SYMBOL
(NYSE: UFS) (TSX: UFS)

MONTREAL, May 28, 2013 /PRNewswire/ – Domtar Corporation (NYSE: UFS)
(TSX: UFS) today announced the signing of a definitive agreement for
the acquisition of privately-held Associated Hygienic Products (“AHP”),
the largest manufacturer and supplier of store brand infant diapers in
the United States, from DSG International for $272 million. The closing
of the transaction is expected by the end of the second quarter of
2013, subject to customary 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.
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,” said John D. Williams, President and Chief Executive Officer of Domtar.
“This will be our fourth transaction in Personal Care in two years, and
with it the division will reach over $200 million in annualized EBITDA
by 2017. This earnings runway is part of our Company-wide goal of
having $300-$500 million in annualized EBITDA from growing businesses
over the next four years.”

AHP manufactures and markets infant diapers in the United States with
established long-term relationships in the retail distribution
channels. AHP operates two large modern facilities, a 376,000 square
foot manufacturing facility in Delaware, Ohio and a 312,000 square foot
manufacturing facility in Waco, Texas. The company also has
administrative offices and operates a distribution center in Duluth,
Georgia. AHP has 621 employees and has annual run rate sales and EBITDA
of $320 million and $31 million respectively.

It is anticipated that the integration to Domtar’s Personal Care
division will provide annualized synergies of $10 million within two
years. The synergies will come from a combination of lower purchasing
costs, a reduction in general and administrative costs and sharing of
best practices in manufacturing and product development.

Commenting on the benefits of the acquisition, Michael Fagan, Senior
Vice-President, Personal Care said “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. AHP
invests heavily in research and development and brings to the
marketplace quality products, a highly trained workforce and the
know-how to service large retailers. I am also impressed with the
substantial investments made in the past five years in the facilities
which will limit the capital requirements for the foreseeable future.”

The acquired business will be integrated in the Personal Care segment of
Domtar’s financial information filed to the Securities and Exchange
Commission.

Please refer to the attached fact sheet for further information.

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About Domtar
Domtar Corporation (NYSE: UFS) (TSX: UFS) designs, manufactures, markets
and distributes a wide variety of fiber-based products including
communication papers, specialty and packaging papers and adult
incontinence products. The foundation of its business is a network of
world class wood fiber converting assets that produce papergrade, fluff
and specialty pulps. The majority of its pulp production is consumed
internally to manufacture paper and consumer products. Domtar is the
largest integrated marketer of uncoated freesheet paper in North
America with recognized brands such as Cougar, Lynx Opaque Ultra, Husky Opaque Offset, First Choice and Domtar EarthChoice. Domtar is also a leading marketer and producer of a complete line of
incontinence care products marketed primarily under the Attends brand name. Domtar owns and operates Ariva, a network of strategically located paper and printing supplies
distribution facilities. In 2012, Domtar had sales of US$5.5 billion
from some 50 countries. The Company employs approximately 9,300 people.
To learn more, visit www.domtar.com.

Forward-Looking Statements
All statements in this press release that are not based on historical
fact are “forward-looking statements.” While management has based any
forward-looking statements contained herein on its current
expectations, the information on which such expectations were based may
change. These forward-looking statements rely on a number of
assumptions concerning future events and are subject to a number of
risks, uncertainties, and other factors, many of which are outside of
our control that could cause actual results to materially differ from
such statements. Such risks, uncertainties, and other factors include,
but are not necessarily limited to, those set forth under the captions
“Forward-Looking Statements” and “Risk Factors” of the latest Annual
Report on Form 10-K filed with the SEC as updated by the Company’s
latest Quarterly Report on Form 10-Q. Unless specifically required by
law, we assume no obligation to update or revise these forward-looking
statements to reflect new events or circumstances.

SOURCE Domtar Corporation

PDF available at: http://stream1.newswire.ca/media/2013/05/28/20130528_C2544_DOC_EN_27132.pdf