Domtar Corp. is selling its diaper and adult incontinence business for US$920 million, nearly a decade after adding the new line of products to offset declining paper sales.

The Montreal and South Carolina-based pulp and paper company says it has signed an agreement to sell the operations to private equity firm American Industrial Partners.

It follows a decision announced in August to conduct a review of "value-creating alternatives" for the personal care business it launched in 2012 with the purchase of Attends.

The sale is part of its strategic transformation towards packaging.

Proceeds will be used to reduce debt by US$600 million and repurchase US$300 million in shares.

Domtar CEO John Williams says the sale maximizes value for shareholders by strengthening its balance sheet, enhancing its cash position and buying back shares.

"This transaction represents a milestone in Domtar's ongoing portfolio transformation and further advances our strategic initiatives that will position Domtar for a sustainable and successful future," he said in an email.

Domtar is converting its Kingsport, Tenn. mill to a lightweight containerboard facility with a capacity to produce about 600,000 tons of recycled linerboard and corrugated material.

Construction is expected to begin in the second quarter and finish by the end of 2022.