Chr. Hansen and Novozymes merger cleared by EU, Kerry to acquire lactase enzyme business

13 Dec 2023 --- The European Commission has cleared the merger between Danish bioscience players Novozymes and Chr. Hansen, conditional upon full compliance with the commitments offered by the parties to divest interests in lactase manufacturing. The global taste & nutrition company Kerry Group has entered into a definitive agreement to acquire part of the worldwide lactase enzyme business of Chr. Hansen and Novozymes, on a carve-out basis. 

By divesting part of the parties’ lactase businesses, the Commission indicates that the transaction “would no longer raise competition concerns.” An independent trustee will monitor the implementation of Novozymes and Chr. Hansen’s commitments. 

Kerry’s acquisition of the lactase enzyme business is subject to Commission approval. This business is assessed at a total consideration of €150m (US$162 million), subject to routine closing adjustments. The acquisition is expected to close in the first half of 2024.

Novozymes and Chr. Hansen have also announced their future name — Novonesis. The companies note that this name reflects the beginning of an era of bio solutions, generating value for their stakeholders and society.

Novozymes reports that the merger approval process is continuing “to progress as planned,” and is expected to close in the first quarter of 2024.

Merger approval
Initially, the Commission’s investigation showed that the merger would have reduced competition in the market for the manufacture of lactase enzymes using genetic modification technology. The Commission determined that with Chr. Hansen’s project to start manufacturing lactase, the merged parties would likely grow into an effective competitor within a short time frame and not have sufficient potential competitors.

To address these concerns, the parties offered to divest Chr. Hansen’s project to enter the market for the manufacturer of lactase, Chr. Hansen’s lactase distribution business and Novozymes’ lactase production facility.

The Commission also determined that the merged parties do not have any specific R&D capabilities that rivals could not otherwise access. It notes that the merged entity’s competitors have the equivalent ability to invest in R&D and, thus, that the merger would not hurt innovation in the industrial biotech sector.

By divesting part of the lactase businesses, the Commission indicates that the transaction would no longer raise competition concerns.Lactase enzymes acquisition
Kerry’s acquisition covers the trade and assets of Chr. Hansen’s global lactase enzyme business and the entire share capital of Nuocheng Trillion Food, a Chinese subsidiary of Novozymes.

In 2022, the Lactase Enzymes Business reported a revenue of around €40 million (US$43 million) with sales in over 50 countries.

With the acquisition, Kerry will further enhance its biotechnology solutions capability after recent additions of c-LEcta in 2022 and Enmex in 2021.

Through the addition of enzyme technology, Kerry aims to create lactose-free and sugar-reduced dairy products that preserve their authentic, clean taste. An increased awareness of lactose intolerance drives global lactase demand, while consumers also choose lactose-free products for lifestyle or health reasons.

Novonesis
The new name of the merged parties — which means “a new beginning” — will be supplemented by a brand identity inspired by the world of microbiology. The new name will be implemented gradually once the proposed combination is completed.

“Novonesis reflects where we came from, what we can achieve and what we will become together. We are dedicated to harnessing the transformative potential of biology,” says Ester Baiget, president and CEO of Novozymes.

Cees de Jong, chairman of Novozymes adds: “We developed the name Novonesis in close collaboration and dialogue between Novozymes and Chr. Hansen. It has been crucial to find a name that can be a home to all our 10,000 employees, but even more importantly, the name should represent the future potential of bio solutions.”

Chr. Hansen and Novozymes merger
Novozymes and Chr. Hansen announced their merger last year.

The merger is the most significant Danish merger on record, resulting in a US$12.3 billion deal. It aimed to broaden the R&D and production coverage, through global scale and a local presence.

Both companies have agreed on provisions regarding shareholders’ distributions until the merger’s completion.

By Jolanda van Hal

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