Global bioscience company Chr Hansen has signed an agreement with industrial biotechnology company Jennewein Biotechnologie to acquire its complete stake in a €310m ($362m) deal on a debt-free basis.

Headquartered in Germany, Jennewein is engaged in the production of human milk oligosaccharides (HMOs) and rare monosaccharides such as L-Fucose and Sialic acid.

Functional ingredients such as HMOs are industrially produced through a fermentation process in which Chr Hansen has its expertise.

Chr Hansen CEO Mauricio Graber said: “The fast-growing HMO market is a new space that we have been following with strong interest for some years.

“In truth, we are making a long-term investment and commitment to HMOs, which I am convinced will bring long-term value creation to our shareholders. Given the addressable market and the expected growth rates, this is now our fifth strategic lighthouse and will be accretive to our organic growth beyond 2020/2021.

“HMOs also fit perfectly with our purpose to ‘Grow a better world. Naturally’, as these are some of nature’s most intricate nutritional components for the most precious and vulnerable – newborn infants and young children.”

The company said that HMOs and probiotics are driving the premiumization trend in infant formula.

The acquisition is said to be in line with Chr Hansen’s 2025 strategy, which focuses on bolstering the company’s presence in the microbial and fermentation technology platforms.

Chr Hansen added that it will finance the acquisition with committed facilities from its existing debt financing partners.

Going forward, Chr Hansen intends to invest more than €200m in Jennewein production assets until 2025, which includes an investment in a brownfield factory to expand HMO capacity and meet the product demand.

Completion of the deal is expected to take place this year.