The European Commission is set to approve the proposed merger between Novozymes and Chr. Hansen after certain commitments are met by the parties.

Novozymes and Chr. Hansen are both bioscience companies. Novozymes develops, manufactures and supplies industrial enzymes to multiple industries, such as agriculture, animal health food and beverage. Chr. Hansen develops natural ingredients solutions for the food, nutritional, pharmaceutical and agricultural industries.

The Commission's investigation showed that the merger, as initially set forth, would have reduced competition in the market for the manufacture of one specific enzyme, lactase, using genetic modification technology. Chr Hansen had a project to start manufacturing a lactase product that would have likely grown into an effective competitor within a short timeframe. The Commission also found that post-merger there would not be sufficient potential competitors to exert sufficient competitive pressure on the merged entity.

To address the Commission's competition concerns, the parties offered to divest:

The Commission said these commitments fully address the competition concerns “by paving the way for the creation of a divested business with the necessary production assets and research and development capabilities to grow as a viable competitive producer of lactase on a lasting basis.”

Following the positive feedback received in the context of the commitments' market test, the Commission concluded that the transaction, as modified by the commitments, would no longer raise competition concerns.

The Commission also undertook a detailed investigation into whether the transaction could have a negative impact on innovation in the industrial biotech sector. After a comprehensive review and extensive benchmarking exercise, the Commission established that merged entity's competitors have the equivalent ability to invest in R&D and that the parties do not have any specific R&D capabilities that rivals could not otherwise access.

The Commission said approval will be granted upon full compliance with the commitments.

Kerry to acquire lactase enzymes business

Kerry Group, the global taste & nutrition company, has entered into a definitive agreement to acquire part of the global lactase enzyme business of Chr. Hansen and Novozymes, on a carve out basis. The acquisition is subject to European Commission approval of Kerry as a buyer, but it would secure one of the necessary divestures needed.

The lactase enzymes business, which includes NOLA Products, further enhances Kerry’s biotechnology solutions capability following the acquisitions of c-LEcta and Enmex. The acquisition adds enzyme technology which helps create lactose-free and sugar reduced dairy products, while preserving their authentic clean taste.

The lactase enzymes business had attributable revenue of approximately €40m in 2022 with sales in over 50 countries. Total consideration is €150m, subject to routine closing adjustments. The acquisition is expected to close in the first half of 2024.

Companies announce new name

Novozymes and Chr. Hansen have announced their future name will be “Novonesis,” reflecting the beginning of an era of biosolutions where Novonesis will unleash the full potential of biological solutions and generate significant value for all stakeholders and society at large. The announcement of the name marks an important milestone towards uniting the two companies.

“Novonesis reflects where we came from, what we can achieve, and what we will become together. We are dedicated to harness the transformative potential of biology. Building on our legacy of developing innovative biosolutions, we stand ready to unlock unprecedented opportunities,” said Ester Baiget, president and chief executive officer of Novozymes. “In Novonesis, we will unite the brightest minds and the best science and technology in the field to help customers and businesses prosper while enabling to solve some of the greatest challenges we all face. We are here to start an era of biosolutions. That is why we have chosen to call our new company Novonesis which means ‘a new beginning’.”      

Closing of the merger is expected to occur in the first quarter of 2024, following regulatory approval. The name will be used and gradually implemented once the proposed combination is completed.  However, until final merger control approvals are received, and the proposed combination completes, Novozymes and Chr. Hansen operate as completely separate companies.

The combined group will include a global network of more than 23 manufacturing sites and close to 40 R&D and application centers that employ around 10,000 talented and purpose-driven employees.