The European Commission approved, under the EU Merger Regulation, the proposed merger between Novozymes A/S and Christian Hansen A/S. The approval is conditional upon full compliance with the commitments offered by the parties.
The EC’s investigation showed that the merger, as initially notified, would have reduced competition in the market for the manufacture of one specific enzyme, lactase, using genetic modification technology. In particular, the Commission noted that Chr Hansen had a project to start manufacturing this product and would very likely grow 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:
- Hansen’s project to enter the market for the manufacture of lactase;
- Hansen’s lactase distribution business;
- Novozymes’ lactase production facility.
These commitments fully address the competition concerns identified by the Commission, 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, according to an EC announcement.
The merger comes with a new name for the newly formed entity: Novonesis, which was a derivation chosen from the Greek word ‘genesis’, which means ‘beginning’, the company explained in a LinkedIn post. “We are happy to announce that Novonesis will be the new company name for the future combination of Novozymes and Chr. Hansen*. The name means ‘A new beginning’ derived from the Greek word ‘genesis’, which means ‘beginning’.”
*The name Novonesis will be used once the proposed combination is completed. The companies expect that to take place in the first quarter of 2024 following regulatory approval.
The Commission also undertook a detailed investigation into whether this 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 the 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 decision is conditional upon full compliance with the commitments. Under the supervision of the Commission, an independent trustee will monitor their implementation.
The transaction was notified to the Commission on 20 October 2023.
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