India's leading biotechnology enterprise, Biocon, has entered into an agreement to sell its enzymes unit to Denmark's Novozymes for $115 million.

The Danish firm will pay $97 million upfront, and $5 million after meeting certain business targets. In addition, $13 million will be paid in service fees and lease payments over a period of up to 10 years.

According to Novozymes, use of enzymes is still in its infancy in India, but awareness of their potential and benefits in food and beverage formulation is growing.

The activities of Biocon have a good strategic fit to our existing enzyme business, said Novozymes Chief Executive Steen Riisgaard. We see several interesting market opportunities combined with synergy potential, making this a very interesting acquisition.

The acquisition of Biocon's enzyme activities provides an important step for Novozymes in strengthening our position on the Indian market, which we believe has an attractive growth potential, he said.

The acquisition will contribute to Novozyme's R&D strategy and brings Biocon's expertise in solid-state fermentation technology.

Biocon's enzyme activities are made up of industrial enzymes, food additives and processing aids.

In financial year 2006-7, Biocon's enzyme sales amounted to $25 million - 12 percent of the company's overall revenue.

Industrial enzymes was our original business when we had started, and over the years became a smaller part of our business. It was a difficult decision to divest the business as it has been with us from the start. But since we wanted to concentrate on bio-pharma, and we got a good valuation for the enzymes business, we decided to sell it, national daily The Times of India (TOI) quoted Biocon Chairman and Managing Director Kiran Mazumdar-Shaw as saying.

Biocon will use the proceeds of the sale, the latest in a wave of cross-border merger and acquisition deals involving Indian firms, to buy companies in Europe, Mazumdar-Shaw said.

Novozymes, the world's largest maker of industrial enzymes, said its acquisition was expected to have long-term annual sales growth of more than 15 percent.

Novozymes entered the Indian market in 1987 and is setting up research and development facilities in Bangalore, where Biocon is based.

Allegro Capital Advisors advised Biocon, while SEB Enskilda and KPMG Investment Banking advised Novozymes on the deal.

The transaction will be completed by the end of this year.

On Wednesday, Biocon reported a 63 percent jump in June quarter net profit to $11.1 million.

India